Description:
Demand Estimation
Imagine that you work for the maker of a leading brand of low-calorie frozen, microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April.
For a refresher on independent and dependent variables, please go to Sophia’s Website and review the Independent and Dependent Variables tutorial, located at http://www.sophia.org/tutorials/independent-and-dependent-variables--3.Note: The following is a regression equation. Standard errors are in parentheses for the demand for widgets.
QD = -2,000 - 100P + 15A + 25PX + 10I
(5,234) (2.29) (525) (1.75) (1.5) R2 = 0.85 n = 120 F = 35.25
ECO 550 – Assignments and Rubrics
Your supervisor has asked you to compute the elasticities for each independent variable. Assume the
following values for the independent variables:
Q = Quantity demanded of 3-pack units
P (in cents) = Price of the product = 200 cents per 3-pack unit
PX (in cents) = Price of leading competitor’s product = 300 cents per 3-pack unit
I (in dollars) = Per capita income of the standard metropolitan statistical area
(SMSA) in which the supermarkets are located = $5,000
A (in dollars) = Monthly advertising expenditures = $640
Write a four to six (4-6) page paper in which you:
and long-term pricing strategies. Provide a rationale in which you cite your results.
market share. Provide support for your recommendation.
has changed. Further assume that the prices are 100, 200, 300, 400, 500, 600 cents.
function Q = -7909.89 + 79.0989P with the same prices.
product. Determine the primary manner in which both the short-term and the long-term
changes in market conditions could impact the demand for, and the supply, of the
product.
supply curves.
qualify as an academic resource.
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Submitted by PROFSTAN on April 26th, 2016 06:04
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