Question: the loglog demand function for becklers frozen pizzas is lnqx...
The log-log demand function for Beckler's Frozen Pizzas is: lnQX = 4 – 0.70 lnPX - 0.50 lnPY + 1.5 lnS + 1.2lnA + 0.40 lnI
The number of pizzas sold per week (QX) depends on the price charged for a pizza (PX), the price charged for a cheese sticks (PY), the percentage of single-parent families (S), monthly advertising expenditures (A) in thousands, and average annual household income (I) in thousands. Answer the following questions by filling in the table below:
i. Interpret the own-price elasticity and indicate whether it is elastic.
ii. Determine the cross-price elasticity in the estimated equation and interpret it.
iii. What does the income elasticity say about Beckler’s Frozen pizza?
iv. What will be the percentage change in the number of pizzas sold if A increases by 5.0%?
v. Indicate whether Qx is elastic or inelastic with respect to single-parent families (S). And why?
vi. The manager of Beckler's plans to increase its price by 5%. How will you advise him, and why?