...Demand Estimation ECO 550 28 July 2014 Demand Estimation Demand estimation is defined as the process of developing and estimating the amount of demand for a product or service. According Kehoe (1972) demand estimation consists of determining as accurately as possible, how many units of a product will be purchased at a specific price, and further determining the change in quantity demanded if the original price IS raised or lowered (p. 29). As a president or chief executive officer of a business, it is key imperative to have an understanding of what is expected in terms of sales. Successful sales companies use demand estimation to predict future sales typically in months, quarters, or years. With this concept, a company is able to estimate how much to produce. This paper will estimate the following demand equation for a leading brand of low-calorie, frozen microwavable food using data from 26 supermarkets around the country for the month of April, compute the elasticities for each independent variable, determine the implications for each of the computed elasticities for the business in terms of short-term, recommend whether or not the firm should cut its price to increase its market share, plot the demand curve for the business, and indicate the crucial factors that could cause rightward shifts and leftward shifts of the demand and supply curves. ------------------------------------------------- Q = Quantity demanded of a unit (dependent variable) ------------------------------------------------- ...
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...Demand Estimation ECO 550 August 10, 2014 Dr. Lundondo Mumeka Demand Estimation In this essay I will assume the role as an employee for the maker of a leading brand of low-calorie, frozen microwavable food chain. Using the data from 26 supermarkets around the country for the month of April and the equation data that has been provided to me, I will compute the elasticity for each independent variable as well as determine the implications for each of the computed elasticities for the business in terms of short-term and long-term pricing strategies. Based on these calculations I will recommend whether the firm should or should not cut its price to increase its market share. Lastly, with the understanding of the concept on supply and demand I will discuss crucial factors that could cause rightward shifts and leftward shifts of the demand and supply curves, illustrating these shifts using graphs plotting the curves. Compute the Elasticity for Each Independent Variable Assume the following values for each independent variable. These values will be used to compute the elasticity for each independent variable for the food chain. The first step in computing these equations will be to convert all price values into dollars, then put the values of P, Px, A, I and M in the above equation. QD = - 5200 - 42P + 20PX + 5.2I + .20A + .25M • Q = Quantity demanded of 3-pack units • P (in cents) = Price of the product = 500 cents per 3-pack unit • PX (in...
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...Demand Estimation Sierra McDaniel ECO 550: Managerial Economics Dr. Moses Pologne 7/24/2014 Option 1: QD=-5200-42P+20PX+5.2I+.20A+.25M In economics, “a variable is an event, idea, value, or some other object or category that a researcher or business can measure” (Basu, 2014, para. 1). There are two types of variables: dependent and independent. Dependent variables are swayed by other factors, but independent variables stand alone and aren’t affected by other variables (Basu, 2014). For this equation there are five independent variables: price (P), competitors price (PX), income (I), advertising expenditures (A), and the number of microwaves sold (M). In order to calculate the given variables to get the quantity demanded the prices must be plugged into the equation: QD = Quantity of demand of 3-pack units P (in cents) = Price of the product = 500 cents per 3-pack unit PX (in cents) = Price of leading competitor’s product = 600 cents per 3-pack unit I (in dollars) = Per capita income of the standard metropolitan statistical area (SMSA) in which the supermarket are located = $5,500 A (in dollars) = Monthly advertising expenditures = $10,000 M = Number of microwaves ovens sold in the SMSA in which the supermarkets are located =5,000 QD=-5200-42500+20600+5.25,500+.2010,000+.255000 = $17,650 1. Compute the elasticity for each independent variable. According to McGuigan, Moyer, and Harris (2014), quantity demanded is most commonly used to discover the...
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...Demand Estimation Tora Heyward ECO 550 – Managerial Economics and Globalization 07/21/2014 Your supervisor has asked you to compute the elasticity for each independent variable. Assume the following values for the independent variables: Introduction In this paper I will compute the elasticity for each independent that was given to me. I will determine the implications for each of the computed elasticity. Elasticity, as it is used in economics, refers to the response of a "dependent" variable to changes in the "independent" variable (n.a., 2014). I will recommend whether the firm should or should not cut its price to increase market share. I will then plot the demand curve and the supply curve. I will determine the equilibrium price and quantity. I will also outline the significant factors that could cause a change in the supply and demand. I will then indicate the crucial factors that cause the rightward shifts and leftward shifts in demand. The maker of a leading brand of low-calorie microwavable food estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April. Assume the following values for the independent variables: Q = Quantity sold per month P (in cents) = Price of the product = 500 PX (in cents) = Price of leading competitor’s product = 600 I (in dollars) = Per capita income of the standard metropolitan statistical area (SMSA) in which the supermarkets are located =...
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...Assignment: Demand Estimation Abraham B. Morris Farah Farahati ECO 550 July 27, 2015 In this paper, as a worker of the leading low-calorie frozen microwavable food, I am going to address and make comparative economic analysis based on demand estimates from the data of 26 supermarkets around the country for the month of April. My independent and dependent variables is squarely based on the consumers of the low-calorie frozen microwavable food. By virtue of the fact, consumers demand for the low-calorie food products depends on the consumers’ money income flows which is one of the independent variable and the price, whereas the the statistics of the number of people who wants to lose weight will be a key issue. I will compute the elasticities of the various independent variables and further determine the equilibrium price and quantity of the low-calorie frozen microwavable food, as well as outlining the determinants of the demand and supply of the products. Further analysis will be made on the shift and movement in the demand and supply curves. The makers of the low-calorie frozen microwavable food has made the following estimate in the regression equation below from 26 supermarkets in the month of April as follows: Per the demand widgets in the equation: QD = - 5200 - 42P + 20PX + 5.2I + 0.20A + 0.25M (2.002) (17.5) (6.2) (2.5) (0.09) (0.21) R2 = 0.55 n = 26 F = 4.88 The assumption for independent variables is drawn from the data provided as...
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...Running Head: DEMAND ESTIMATION 1 DEMAND ESTIMATION Name Professor Course Date DEMAND ESTIMATION 1. Elasticities of the independent variables 2 Demand equation is given by: QD = -5,200 – 42P + 20C+ 5.2(I) + 0.2(A) + 0.25(M) 100cents = 1$ P = 500 cents, C = 600cents, I = 550,000cents and A = 1,000,000, M = 5,000 QD = -5,200 – [42 × 500] + [20 × 600] + [5.2 × 550,000] + [0.2 × 1,000,000] + [0.25 × 5,000] QD = -5,200 – 21,000 + 12,000 + 2,860,000 + 200,000 + 1,250 QD = 3,047,050 a) Price elasticity of demand (PED) Price elasticity of demand is computed using the following formula: ������������ ������������ × ������ where ������������ ������ ������������ represents the change in quantity demanded with respect to a unit change in price (indicated by the coefficient of P in the equation) PED = -42 × 500 3,047,050 = - 0.00689 The price elasticity of demand implies that any 1% change in the price of the product causes a 0.00689% change in quantity demanded. A further implication is that a change in price leads to a less than proportionate change in quantity demanded hence making the demand for the product is price elastic. Any increase in price will lead to a decrease in quantity demanded of the product, this is indicated by the negative sign of the price elasticity of demand. The firm should increase its price since this will result into an increase in its total revenue as the consumers will still be willing to consume more than the quantity...
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...Demand Estimation Dr. Xiaodong Wu Managerial Economics October 24, 2014 Elastics for Variables As the maker for frozen microwavable food we have been instructed to compute the elasticities for each independent variable. The elasticities are important because they demonstrate the direction and magnitude of change for a given variable (McGuigan, Moyer, Harris, 2014, 2014, p. 73). This data can be used to reflect supply and demand of a product and determine the feasibility of pricing strategies. To compute the elastic price for the microwave food market we will use the following regression equation and variables: QD = 20,000 - 10P + 1500A + 5PX + 10I Q = Quantity demanded P (in cents) = Price of the product = 8,000 PX (in cents) = Price of leading competitor’s product = 9,000 I (in dollars) = Per cap income of the (SMSA) of supermarkets = 5,000 A (in dollars) = Monthly advertising expenditures = 64 Computing the elasticities for each variable are as follows: Elasticity P = (DQD/DP)/(QD/P) QD = 20,000 - 10*8,000 + 1500*64 + 5*9,000 + 10*5,000 = 131,000 DQD/DP = 0 - 10 + 0 = -10 Elasticity P = (-10)/(131,000/8,000) = -.610687 for an absolute value of .61 Elasticity PX = (DQD/DPX)/(QD/PX) DQD/DPX = 0 - 5 + 0 = -5 Elasticity PX = (-5)/(131,000/9,000) = -.343511 for an absolute value of .34 Elasticity I = (DQD/DI)/(QD/I) DQD/DI = 0 - 10 + 0 = -10 Elasticity I = (-10)/(131,000/5...
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...Demand Estimation Doris Ard Dr. Muhammad Islam Economics 550 7/19/2014 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. Note: The following is a regression equation. Standard errors are in parentheses for the demand for widgets. QD = - 5200 - 42P + 20PX + 5.2I + .20A + .25M (2.002) (17.5) (6.2) (2.5) (0.09) (0.21) R2 = 0.55 n = 26 F = 4.88 Your supervisor has asked you to compute the elasticity 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 = 500 cents per 3-pack unit PX (in cents) = Price of leading competitor’s product = 600 cents per 3-pack unit I (in dollars) = Per capita income of the standard metropolitan statistical area (SMSA) in which the supermarkets are located = $5,500 A (in dollars) = Monthly advertising expenditures = $10,000 M = Number of microwave ovens sold in the SMSA in which the supermarkets are located = 5,000 1. Compute the elasticity for each independent variable. Note: Write down all of your calculations. QD = - 5200 - 42P + 20PX + 5.2I + .20A + .25M QD = -5200 - 42(500) + 20(600) + 5.2(5500) + .20(10,000) + .25(5,000) QD = -5,200 - 21,000 + 12,000 + 28,600 + 2,000 + 1,250 = 17,650 P =...
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...the computed elasticities for the business in terms of short-term and long-term pricing strategies. Provide a rationale in which you cite your results. Price Elasticity is -1.19, a 1% increase in price reduces quantity by 1.19%. The demand for this product is elastic and higher revenue may discourage consumers. Cross-price elasticity is 0.68, a 1% increase in the price of the competitor’s product will result in an increase in the quantity demand of the product by .68%. This shows inelastic conditions between the product and the price of the competitors therefore the competitors is not an issue because their price will not affect sales Advertisement-elasticity is 0.11, a 1% increase in advertising expenditures increases the quantity of good sold by 11%. Therefore, demand is rather inelastic to advertising. Advertisement is not always a sure thing to increase revenue. It could have an adverse action and to lose customers Income-elasticity is 1.62, with a 1% increase in income the demand will rise 1.62%. The firm can decide to increase price if cost of living increases. In regard to the microwave oven the elasticity is 0.07, a 1% increase in the number of microwave ovens would increase the quantity of demand by 0.07%. Therefore, the demand is inelastic in this case Recommend whether you believe that this firm should or should not cut its...
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...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. 1. Compute the elasticities for each independent variable. Option 1 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 = 500 cents per 3-pack unit PX (in cents) = Price of leading competitor’s product = 600 cents per 3-pack unit I (in dollars) = Per capita income of the standard metropolitan statistical area (SMSA) in which the supermarkets are located = $5,500 A (in dollars) = Monthly advertising expenditures = $10,000 M = Number of microwave ovens sold in the SMSA in which the supermarkets are located = 5,000 QD = -5200 – 42(P) + 20 (PX) + 5.2 (I) + 0.20 (A) + 0.25 (M) =-5200 – 42*500 + 20*600 + 5.2*5500 + 0.20*10,000 + 0.25*5,000 = -5200-21000+12000+28,600+2000+1250 = 17650 Price Elasticity: -42*500/26,560 = -1.19 Cross Elasticity: 20*600/26,560 = 0.68 Income Elasticity: 5.2*5500/26,560 = 1.0768 = 1.62 Advertisement Elasticity: 0.2*10,000/26,560 = 0.11 Microwave Oven Elasticity: 0.25*5,000/26,560 = 0.07 Elasticity refers to the degree of changes in a demand or supply curve when prices changes. The elasticity shows the...
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...Demand Estimation Nekishawa Ellis Strayer University Demand Estimation For this assignment, one is to imagine that they work for the maker of a leading brand of low calorie, frozen microwavable food. The maker estimates a demand equation for its product. They use data from twenty-six supermarkets around the country for the month of April. To get a better understanding of how to solve the equation, one must first have a better understanding of demand estimation. Demand estimation is a process that involves coming up with an estimate of the amount of demand for a product or service. One of the reasons that companies use demand estimation is to assist with pricing. When one has an idea of what the demand would be for the product, one knows approximately how much they have to price the product. With demand estimation, a company can gauge how much to produce and make other important decisions. As one moves forward with tackling the assignment, one will first find that the elasticity must be computed for each independent variable. With the regression analysis, quality demand (QD) represents the equation QD = -5200 – 42P + 20PX + 5.211 + .20A + .25M. The product price (P) can have a negative relation to quality demand as well. The price of the leading competitor is represented by (PX). As price changes demand, this is the result (PX). Income is represented by (I). (A) stands for monthly advertising. As one advertises, the end result would be more sells. (M) represents the number...
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...Demand Estimation Stacy D. Lucero Strayer University April 28, 2015 Abstract By using data from the month of April from 26 supermarkets around the country that sells our low-calorie, frozen microwavable dinners we are going to discover which independent variables have the greatest effect on the demand of our products. We are also going to graph a demand and supply curve in order to more accurately forecast our demand. Demand Estimation As an analyst for the leading brand of low-calorie, frozen microwavable dinners my boss has asked me to produce a demand estimation using existing data. We are trying to forecast how to price our products to increase our sales by taking independent variables and estimating how elastic they are in relation to our products. We are also going to determine our demand and supply curve to further our knowledge for more accurate forecasting. Elasticity for Independent Variables We wanted to see how elastic the demand for our product is by using data from 26 supermarkets around the country for the month of April. When referring to the elasticity of demand we are trying to determine if prices changes to our product will help us to sell more of our dinners. To do this we used a regression equation. We then computed the elasticity’s of several independent variables that would have an impact on our sales. The independent variables that we used were the price of the competitor’s product, the per capita income of the area nearest the supermarkets...
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...Demand Estimation Managerial Economics & Globalization – ECO 550 Dr. Lundondo Mumeka July 17, 2014 Introduction This assignment is trying to compute the elasticities for each independent variable in a giving regression equation for the demand of a leading brand of low-calorie microwavable food across 26 superstores for the month of April. The linear equation provided is QD = -5200 – 42P + 20 PX + 5.2I + .20A + .25M which suggests that it is dependent on the following variables: * P - Price of the product * PX – Price of the leading competitor’s product. * I – Per capita income of the standard metropolitan statistical area in which the superstores are located. * A – Monthly advertising costs. * M – No. of microwaves sold in the metropolitan areas being considered. Then determining the implications for each of the computed elasticities for the business in terms of short-term and long-term pricing strategies of the product. And also create the supply and demand curves at different prices to determine the equilibrium price and quantity. Finally, evaluate factors that could impact the rightward / leftward shifts of the demand and supply curves. Computing the elasticities for each independent variable. The following data was provided by the professor that needs to be plugged into the Demand equation above to determine the Quantity demanded (QD): PX = 600 I = 5,500 A = 10,000 M = 5,000 QD = -5200 – 42P + 20 PX + 5.2I + .20A + .25M QD =...
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...member of a consultation team who is working on this very important assignment for a soft drink company. The main task is to evaluate factors affecting the soft drink consumption. Therefore, you should revise the knowledge of demand analysis and carry out an investigation on the possible determinants of the demand for the product. The consultant should also describe the methodology of a multiple linear regression and its purpose in estimating a demand function. The consultant should then run a multiple linear regression in linear and multiplicative forms based on the data provided by the company and report on the estimated result. They will have to evaluate the estimated demand equations both in linear and multiplicative forms, select the one, which can best describe the consumption. The consultant will also have to obtain the estimated values of the various demand elasticities from the estimated coefficients of the regression and explain the meaning of each elasticity. From the demand equation, the consultant should recommend how to improve the soft drink consumption. The following table provides data on soft drink consumption in can per capita as it relates to prices, income per capita, and mean temperature across regions. a. Estimate the demand for soft drinks using a multiple linear regression in both linear and multiplicative forms. Linear form : Y = a + bP + cI + dT Multiplicative form : Y = a • Pb • Ic • Td : log (Y) = A + b log (P)...
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...Employment-At-Will Doctrine Tonia M. Igo Strayer University LEG500 Professor Renee Berry February 10, 2015 Employment-At-Will Doctrine 2 “See only that thou work; and thou canst not escape the reward” -Ralph Waldo Emerson Introduction While many Americans agree that satisfactory job performance should be rewarded with job security, amongst other benefits, the United States is the only major industrial power that maintains a general employment-at-will doctrine. As written, this doctrine is a legal ruling which gives employers broad discretion to fire employees “for a good reason, a bad reason, or no reason at all”, (Halbert & Ingulli, 2012). Likewise, an employee can quit a job at any time without legal consequences. However, it is my opinion that this doctrine provides little legal protection for at will employees; it rather serves to empower the employer because it also allows the employer to change its policies or terms of employment without notice or explanation. For instance, an employer can adjust wages, benefits, or reduce paid time off leaving at will employees at risk for sudden dismissal, modified work schedule, and unannounced decreases in pay and/or benefits. Late in the 19th century, employment at will came under heavy fire in the United States resulting in revision of state legislation to implement exceptions to the rule. Guidelines relating to employment at will are still developing in many states. The common exceptions are: (1) breach of contract by the employer...
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