You have been presented with the following data and asked to fit statistical demand functions: PERIOD QUANTITY PRICE INCOME ADVERTISING 1 120 8.00 10 3 2 165 4.00 22 7 3 120 7.00 20 5 4 165 3.00 20 8 5 180 4.00 30 8 6 90 10.00 19 6 7 150 4.00 18 10.2 8 190 1.60 25 9.3 9 160 5.00 30 8 10 200 2.00 35 9.5 Linear Relationship Use any multiple regression packages to estimate a linear relationship between the dependent variable and the independent variables. Is the estimated demand function “good”? Why or why not? Discuss the economic implications of the various coefficients.

You have been presented with the following data and asked to fit statistical demand functions: PERIOD QUANTITY PRICE INCOME ADVERTISING 1 120 8.00 10 3 2 165 4.00 22 7 3 120 7.00 20 5 4 165 3.00 20 8 5 180 4.00 30 8 6 90 10.00 19 6 7 150 4.00 18 10.2 8 190 1.60 25 9.3 9 160 5.00 30 8 10 200 2.00 35 9.5 Linear Relationship Use any multiple regression packages to estimate a linear relationship between the dependent variable and the independent variables. Is the estimated demand function “good”? Why or why not? Discuss the economic implications of the various coefficients.

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

Chapter4A: Problems In Applying The Linear Regression Model

Section: Chapter Questions

Problem 3E

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GM’s Food Shops has completed a study of weekly demand for its “new-fashioned” tacos in 53 regional markets. The study revealed that where Q is the number of tacos sold per store per week, A is the level of local advertising expenditure, Pop denotes the local population (in thousands), and Pr is the average taco price of local competitors. For the typical GM’s outlet, P = P1.50, A = P1,000, Pop = 40, and Pr = P1. Q = 400 - 1,200P + 0.8A + 55Pop + 800Pr Estimate the weekly sales for the typical GM’s outlet. Determine the equilibrium price and equilibrium quantity, if supply is Qs = 700 + 1,200P considering the general demand function of GM’s outlet Should GM raise its taco prices? Why or why not?
1.Consider the Dorfman-Steiner model that relates the advertising cost to market power. Giventhe demand function:Q(P,A)=P-1/2A 1/4 (i) Show that the price elasticity of demand is ηp=1/2.(ii) Show that the advertising elasticity of demand ηA=1/4.
A manufacturer of automobiles is planning a new model and wants to determine the responsiveness of demand in a number of scenarios. The demand function for the new model is given by the following function: Q = 30000 – 3P + 2000ln(PA) + Y Where Q is the quantity sold of the new model, P is the price for the new model, PA is the price of the competitor’s model and Y is the annual income of a typical purchaser. The new model price is planned to be £20,000 and the competitor is charging £25,000. The annual income of a typical purchaser is £30,000. (a) The manufacturer wishes to determine the responsiveness of the demand for the new model if the price of a competitor’s model changes. Which measure of elasticity would be appropriate to fulfil this requirement? And provide a calculation of its value.
Suppose the own price elasticity of market demand for retail gasoline is -0.9, the Rothschild index is 0.6, and atypical gasoline retailer enjoys sales of $1, 200, 000annually. What is the price elasticity of demand for arepresentative gasoline retailer's product? Instruction:Enter your response rounded to two decimal places. Ifentering a negative number, be sure to use thenegative (-) sign.
Analyze the demand function for Toyotas in problem C4, page 82. Please also read “What is a Symbol” located in the folder with this assignment. This function is: QT = 200 -.01PT +.005PM -10PG +.01I +.003A Where: QT = quantity purchased PT = average price of Toyotas PM = average price of Mazdas PG = price of gasoline I = per capita income A = dollars spent annually on advertising Characterize this function by circling all in the following list that are applicable: univariate, bivariate, multivariate, linear, exponential, logarithmic, curvilinear, 1st degree, 3rd degree, additive, multiplicative, linearly homogeneous What is the numerical value of the partial derivative of the function with respect to the price of gasoline (PG) (be sure to also include the + or – sign. Note: I do not want the symbol for this partial derivative)? Write the mathematical symbol representing the coefficient of income (I) (the numerical…
Industry demand and supply for a new soft drink NeuCola is as follows:Qd = 460,000 – 100,000 P + 22,500 Pc + 21 Y + 2,000 TQs = 40,000 + 80,000 P – 60,000 PL – 5,000 Pk Where P is the average price of the drink in $ per pack, Pc is the average wholesale price of other branded drinks in the market, Y is income in $, T is the average daily temperature in degrees, PL is the average wage of labor in $ per hour and Pk is the average cost of capital in $. a.When quantity is expressed as a function of price, what are NeuCola’s demand and supply curves if Pc = $8, Y=$10,000 billion, T=75 degrees, PL=$10, and Pk=$12. b., Will, there be a surplus or shortage of NeuCola when P = $5, $7, and $9? Use a table to show values of quantity demanded and quantity supplied at each level of price. (Values of Qd and Qs calculated in millions may be rounded in the table).c.Calculate the market equilibrium price and equilibrium output.d.Draw a labeled hypothetical demand and supply model clearly indicating…
Industry demand and supply for a new soft drink NeuCola is as follows: Qd = 460,000 – 100,000 P + 22,500 Pc + 21 Y + 2,000 T Qs = 40,000 + 80,000 P – 60,000 PL – 5,000 Pk Where P is average price of the drink in $ per pack, Pc is average wholesale price other branded drinks in the market, Y is income in $, T is average daily temperature in degrees, PL is average wage of labor in $ per hour and Pk is the average cost of capital in $. When quantity is expressed as a function of price, what are NeuCola’s demand and supply curves if Pc = $8, Y=$10,000 billion, T=75 degrees, PL=$10 and Pk=$12. Will there be surplus or shortage of NeuCola when P = $5, $7 and $9? Use a table to show values of quantity demanded and quantity supplied at each level of price. (Values of Qd and Qs calculated in millions may be rounded in the table). Calculate the market equilibrium price and equilibrium output. 4. Draw a labelled hypothetical demand and supply model…
Industry demand and supply for a new soft drink NeuCola is as follows: Qd = 460,000 – 100,000 P + 22,500 Pc + 21 Y + 2,000 T Qs = 40,000 + 80,000 P – 60,000 PL – 5,000 Pk Where P is average price of the drink in $ per pack, Pc is average wholesale price other branded drinks in the market, Y is income in $, T is average daily temperature in degrees, PL is average wage of labor in $ per hour and Pk is the average cost of capital in $. a. When quantity is expressed as a function of price, what are NeuCola’s demand and supply curves if Pc = $8, Y=$10,000 billion, T=75 degrees, PL=$10 and Pk=$12. b. Will there be surplus or shortage of NeuCola when P = $5, $7 and $9? Use a table to show values of quantity demanded and quantity supplied at each level of price.
Management of McPablo’s Food Shops has completed a study of weekly demand for its “old-fashioned” tacos in 53 regional markets. The study revealed that Q = 400 -1,200P + .8A + 55Pop + 800P° where Q is the number of tacos sold per store per week, A is the level of local advertising expenditure (in pesos), Pop denotes the local population (in thousands), and P0 is the average taco price of local competitors. For the typical McPablo’s outlet: P = Php1.50, A = Php1,000, Pop = 40, and P0 = Php1.00. Estimate the weekly sales for the typical McPablo’s outlet. What is the current price elasticity for tacos? What is the advertising elasticity? Should McPablo’s raise its taco prices? Why or why not?
Suppose the European Union (EU) is investigating a proposed merger between two of the largest distillers of premium Scotch liquor. Based on some economists’ definition of the relevant market, the two firms proposing to merge enjoyed a combined market share of about two-thirds, while another firm essentially controlled the remaining share of the market. Additionally, suppose that the (wholesale) market elasticity of demand for Scotch liquor is –1.3 and that it costs $16.20 to produce and distribute each liter of Scotch. Based only on these data, provide quantitative estimates of the likely pre- and postmerger prices in the wholesale market for premium Scotch liquor. In light of your estimates, are you surprised that the EU might raise concerns about potential anticompetitive effects of the proposed merger? Explain carefully.
You have been appointed the new manager for Ghana Airways Company Limited, an internationalairline company that flies from the Kotoka International Airport in Accra to Heathrow Airport inLondon every day. The airline is described as a monopolist and has the possibility of discriminatingbetween its Business and Economy Travelers. To help you determine the prices your servicesappropriately to maximise profit, you engaged an economist who estimated the demand function forboth Economy and Business Travelers as:Q1 = 24 – 0.2P1 Economy TravelersQ2 = 10 – 0.05P2 Business TravelersWhere Q1 and Q2 are the respective numbers of Economy and Business Travelers and P1 and P2 aretheir respective fares (in GH¢). If the Total Cost (TC) of this airline company for flying these twocategories of travelers is given as TC = 35 + 40Q, where Q = Q1 + Q2.What can you say about the fares, number of travelers and profit of Ghana Airways CompanyLimited, with and without price discrimination?
Suppose demand and supply curves for you company’s product are given by:QD = 10 -XP QS =5 +YP You will need to find value for X between [0.1 -3] and Y between [0.1 -3] based on the elasticity of demand and supply. This elasticity in turn depends on the type of product, marketstructure and competitive advantage of the company. In this case, the product is an electric car and the price elasticity of demand is high.

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PERIOD	QUANTITY	PRICE	INCOME	ADVERTISING
1	120	8.00	10	3
2	165	4.00	22	7
3	120	7.00	20	5
4	165	3.00	20	8
5	180	4.00	30	8
6	90	10.00	19	6
7	150	4.00	18	10.2
8	190	1.60	25	9.3
9	160	5.00	30	8
10	200	2.00	35	9.5