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: Cengage Learning
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Textbook Question
Chapter 5, Problem 1E
The
where k has been estimated (with past data) to equal 100.
- If
- What happens if P is reduced to $17,500?
- How would you go about developing a value for k?
- What are the potential weaknesses of this model?
a)
Expert Solution
To determine
To calculate: The value of S (sales).
Answer to Problem 1E
The value of S is $66000
Explanation of Solution
S = Sales
Y = Disposable personal income
Z = population between the age group
P = inverse price
K = estimated data
b)
Expert Solution
To determine
To ascertain: The effect of decrease in the value of P.
Answer to Problem 1E
The sales will increase by 75429 − 66000 = $9429
Explanation of Solution
The sales will increase by 75429 − 66000 = $9429
c)
Expert Solution
To determine
To find: The process to develop the value for K.
Explanation of Solution
The past data of S, Y, Z and P is required where,
S = Sales
Y = Disposable personal income
Z = population between the age group
P = inverse price
K = estimated data
to formulate the value of k. However, this data will be utilized by various techniques like regression analysis in order to find the value of k.
d)
Expert Solution
To determine
To detect: The potential weakness of the model is to be determined.
Explanation of Solution
The given model depends on three constituents, Y, Z, and P. Therefore, any change in these consequents will change the value of sales. Moreover, it will be difficult to find the consequent that is responsible to change in sales(S).
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Students have asked these similar questions
The forecasting staff for the Prizer Corporation has developed a model to predict sales of its air-cushioned-ride snowmobiles. The model specifies that sales S vary jointly with disposable personal income Y and the population between ages 15 and 40, Z, and inversely with the price of the snowmobiles P. Based on past data, the best estimate of this relationship isS = k (YZ/ P)where k has been estimated (with past data) to equal 100.a. If Y = $11,000, Z = $1,200, and P = $20,000, what value would you predict for S?b. What happens if P is reduced to $17,500?c. How would you go about developing a value for k?d. What are the potential weaknesses of this model?
Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web site construction is estimated to be $172,000. Variable processing costs are estimated to be $5 per book. The publisher plans to sell single-user access to the book for $42.
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Use a data table that varies…
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Chapter 5 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Ch. 5 - The forecasting staff for the Prizer Corporation...Ch. 5 - Prob. 2ECh. 5 - Metropolitan Hospital has estimated its average...Ch. 5 - Prob. 4ECh. 5 - A firm experienced the demand shown in the...Ch. 5 - The economic analysis division of Mapco...Ch. 5 - The Questor Corporation has experienced the...Ch. 5 - Bell Greenhouses has estimated its monthly demand...Ch. 5 - Savings-Mart (a chain of discount department...Ch. 5 - Prob. 1.1CE
Ch. 5 - Plot the logarithm of arrivals for each...Ch. 5 - Logarithms are especially useful for comparing...Ch. 5 - Prob. 1.4CECh. 5 - In attempting to formulate a model of the...Ch. 5 - Estimate the double-log (log linear) time trend...Ch. 5 - Prob. 2.1CECh. 5 - Prob. 3.1CECh. 5 - Prob. 3.2CECh. 5 - Prob. 3.3CE
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