Sherwin-Williams Company is attempting to develop a demand model for its line of exterior house paints. The company’s chief economist feels that the most important variable affecting paint sales (Q) (measured in gallons) is the Selling price (P) (measured in Ghana cedis per gallon). The chief economist decides to collect data on the variables in a sample of 10 company sales regions that are roughly equal in population. Data on paint sales, and selling prices were obtained from the company’s marketing department. The data are shown in the table below: Sherwin-Williams Company DataSales RegionSales (Q)Selling Price (P) (GHS/Gallon)116015 222013.5314016.5419014.55130176160167200138150189210121019015.5 Specify the linear demand model for Sherwin-William’s paint. Estimate the demand function for Sherwin-Williams paint. Give an economic interpretation of the estimated intercept and slope coefficients.If the estimated supply function for Sherwin-Williams paint is ;Determine the equilibrium price and quantity for Sherwin-William’s paint.Determine the quantity of sales per gallon of paint if the average price per gallon is GHS15.10.Determine the price elasticity of demand at equilibrium and comment on the economic relevance of the elasticity coefficient obtained. Calculate the total revenue derived from sales at equilibrium.

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Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4: Estimating Demand

Section: Chapter Questions

Problem 9E

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Sherwin-Williams Company is attempting to develop a demand model for its line of exterior house paints. The company’s chief economist feels that the most important variable affecting paint sales (Q) (measured in gallons) is the Selling price (P) (measured in Ghana cedis per gallon). The chief economist decides to collect data on the variables in a sample of 10 company sales regions that are roughly equal in population. Data on paint sales, and selling prices were obtained from the company’s marketing department. The data are shown in the table below:

Sherwin-Williams Company Data
Sales Region	Sales (Q)	Selling Price (P) (GHS/Gallon)
1	160	15

2	220	13.5
3	140	16.5
4	190	14.5
5	130	17
6	160	16
7	200	13
8	150	18
9	210	12
10	190	15.5

Specify the linear demand model for Sherwin-William’s paint.
Estimate the demand function for Sherwin-Williams paint.
Give an economic interpretation of the estimated intercept and slope coefficients.
If the estimated supply function for Sherwin-Williams paint is ;

Determine the equilibrium price and quantity for Sherwin-William’s paint.
Determine the quantity of sales per gallon of paint if the average price per gallon is GHS15.10.

Determine the price elasticity of demand at equilibrium and comment on the economic relevance of the elasticity coefficient obtained.
Calculate the total revenue derived from sales at equilibrium.

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