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Q= 650 - 1,000P + 0.8A + 65Pop + 500Pc where Q is the number of tacos sold per store per store per week; A

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Q= 650 - 1,000P + 0.8A + 65Pop + 500Pc where Q is the number of tacos sold per store per store per week; A is the level of local advertising expenditure in dollars; Pop is the local population in thousands; and P . is the average taco price of local competitors. For the typical Taco Del Mar outlet, P = $2.50, A = $6,000, Pop = 70, and Pc = $2.25 Open the Computer exercise 3-Workbook and program the elasticity worksheet (using the appropriate formulas) to answer each of the following: a) Estimate the weekly revenue in dollars for the typical Taco Del Mar (given the above information). (2 points for revenue, 2 points for Q) b) What is the own price elasticity for Taco Del Mar tacos under typical conditions? (2 points) c) Should Taco Del Mar raise its taco prices? Discuss why or why not. (2 points) d) Calculate the advertising elasticity for Taco Del Mar tacos. (2 points) e) Use the advertising elasticity to predict the change in Q (as opposed to the % change in Q) resulting from a 1% increase in advertising expense, holding all other factors constant. (2 points) f) Calculate the current cross price elasticity of local taco competitors. (2 points) g) Are the competitor tacos complements or substitutes? Explain why. (2 points)

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