PCQ =
3.624 - 0.356 PR + 0.221 PCDI + 0.819 AD - 0.094 D64
- 0.321 D68 - 0.087 T63 - 0.683 POST71AD
PCQ = Per Capita Quantity of Cigarettes Consumed Domestically
(thousands per person 18 years old & older)
PR = Retail Price/Cigarette Including State and Federal Taxes (in cents, 1982 dollars)
PCDI = Per capita Disposable Income (thousands of 1982 dollars)
AD = Advertising Expenditures (billions of 1982 dollars)
D64 = 1 for 1964-1990; Surgeon General's 1964 Report (Links Smoking & Cancer)
D68 = 1 for 1968-1970; Fairness Doctrine Act
(Cigarette Companies Required to Air One Antismoking Ad Per Four Prosmoking
Ad)
T73 = Year - 1972; Clean Indoor Air
(Trend--more states with laws to Limit Second-Hand Smoke Exposure of Non-smokers)
POST71AD = AD for 1971-1990; Post-Broadcast Advertising Ban
[Source: Tremblay, Carol Horton, and Victor J. Tremblay, The Impact of Cigarette Advertising on Consumer Surplus, Profit, and Social Welfare, Contemporary Economic Policy, XIII, January, 1995, pp. 113-124]
Demonstrate that 1999 demand for cigarettes is Q
= 3.527 – 0.356 PR, when PCDI = 10, AD = 1, D64 = 0, D68 =
0, POST71AD = 2, T73 = 25.