This website uses cookies to ensure you have the best experience. Learn more

Demand Estimation Essay

947 words - 4 pages

Compute the elasticities for each independent variable. Note: Write down all of your calculations.
P= 500, M= 5000, A= 10,000, I = 5,500, C=600
QD= - 5200 – 42(500) + 20(600) + 5.2(5500) + 0.20(10000) + 0.25(5000) = 17,650
Price Elasticity (Ep) = (P/Q) (∆Q/∆P)
∆Q/∆P = -42.
Price Elasticity (Ep) = (P/Q) (-42) (500/17650) = -1.19
Ec = 20(600/17560) = 0.68
EA= (P/Q) (0.20) (10000/17650) = 0.11
EI = (P/Q) (5.2) (5500/17650) = 1.62
EM = (P/Q) (0.25) (5000/17650) = 0.07
Determine the implications for each of 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 ...view middle of the document...

Provide support for your recommendation
I recommend the firm cut the price, decreasing the price would raise the quantity of demand and would lead to an increase in the company share.

Assume that all the factors affecting demand in this model remain the same, but that the price has changed. Further assume that the price changes are 100, 200, 300, 400, 500, 600 cents
(a) Plot the demand curve for the firm (see below graph)
-5200 -12600 12000 28600 2000 1250 26050

-5200 -16800 12000 28600 2000 1250 21850

-5200 -21000 12000 28600 2000 1250 17650

-5200 -25200 12000 28600 2000 1250 13450

(b) Plot the corresponding supply curve on the same graph using the following
MC / supply function Q = -7909.89 + 79.1P with the same prices

7909.89 2600 12000 28600 2000 1250 23340.11

7909.89 16800 12000 28600 2000 1250 19140.11

7909.89 21000 12000 28600 2000 1250 14940.11

7909.89 25200 12000 28600 2000 1250 10740.11
(c) Determine the equilibrium price and quantity
The demand and supply calculation 38650-42P = -7209.89+79.0989P
38650+7209.89 = (79.0989+42) P
121.0989P= 45859.89
P = 378.6978
Q= 22744.6924
(d) Outline the significant factors that could cause changes in supply and demand for the low-calorie, frozen microwavable food. 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
Factors affecting demand:
Price of the commodity
Income of the consumers
Consumer’s taste and preferences
Consumer awareness
Political stability
Price of other related commodities
Speculation of future price changes

Factors affecting supply:
Own price of the commodity
Price of other related commodities
Prices of production factors
Goals of the producing firm
Technology state of the firm
...

Other assignments on Demand Estimation

Angimex Vietnam Essay

4693 words - 19 pages ) 6,019+ 6,019* 18= 7,102 tons 3.3 ESTIMATION OF PRICE In 2012, according to Nguyen H (2012), price of Fragrant & Jasmine 5% broken is about 610-620 US$/ton. Angimex estimates this price will increase 5% in the second year and 7% in third year due to demand growth. Year | 2013-2014 | 2014-2015 | 2015-2016 | Assumption % increase of price | | 5% | 7% | Price ($/ton) | 620 | 651 | 697 | 3.4 REVENUE ESTIMATION Year | 2013

Sohail Essay

825 words - 4 pages , Measures of Dispersion, regression and co-relation, index | | | |number , time series, hypothesis testing, estimation, ANOVA. | | |7. | |10% | | |HRM

Download

939 words - 4 pages problems facing our garment industry. A recent Reuters report focused on the reasonable wages for the garment workers in Bangladesh. There has been dissatisfaction among RMG workers with the low wages. After the formation of labour organisations, RMG workers have been pressing home their demand for salary hike. This dissatisfaction led to unrest in the garment industry in June 2012. Following the unrest, more than 300 garments industries were shut

Kinght-Excalibur Case

708 words - 3 pages EXCALIBUR ENGINE PARTS – NEGOTIATION PLAN 1. What is your BATNA (Best Alternative to a Negotiated Agreement)? Sell the pistons to Hanks Super Monster Tractor for $300 / piston 2. Why it is the “best” alternative? * No other viable alternative available if we decided to go without major losses. * Better than not selling at all considering the poor demand for specialized pistons in the market 3. How acceptable your BATNA is to you

Drp Exam

5034 words - 21 pages . Asset-Based Risk Assessment 3. Which of the following best describes the concept and purpose of BCP? A. BCPs are used to reduce outage times. B. BCPs and procedures are put in place for the response to an emergency. C. BCPs guarantee the reliability of standby systems. D. BCPs are created to prevent interruptions to normal business activity. 4. What are the three goals of a business impact analysis? A. Downtime estimation, resource requirements

Wilkerson

1632 words - 7 pages  prices  for  different  customers  (groups  of  customers)  based  on  the  actual   amount  of  resources  spent  (e.g.  implement  activity-­‐based  pricing).     Problem     Wilkerson  has  to  estimate  the  profitability  of  its  products  in  order  to  make  long-­‐term  product  mix   decisions.   These   decisions   should   be   based   on   estimation   of   product   costs   and   might   include   decisions   to   continue

Literature

4974 words - 20 pages . Norris, J.B. Wilbur, S.Utku, Elementary Structural Analysis, Tata McGraw Hill, 4th edition, 2003. 3. L. S. Negi and R. S. Jangjid, Structural Analysis, Tata Mc. Graw, New Delhi, 1997. CE 204 ENVIRONMENTAL ENGINEERING I (3-0-0-6) Introduction, Population Forecasting and Water Demand, Physical, Chemical and Biological Characteristics of Water and Wastewater, Wastewater Flow, Sewerage system and sewer design, Basic Microbiology: cells

The Broadway Cafe

2303 words - 10 pages on demand estimation. The estimated demand function provides managers with an accurate way to predict future demand for the firm’s product as well as set of elasticities that allow managers to know in advance the consequences of planned changes in prices, competitors’ prices, variations in consumers’ income, or the expected changes in any of the other factors affecting demand. As managers you may not need to estimate demand by yourself

Continental

2689 words - 11 pages We have a positive fundamental outlook for the airline industry. In 2009, the S&P Airlines Index increased 27.43%, versus a 29.03% rise for the S&P 500 The airline industry is highly cyclical, and the level of demand for air travel is correlated to the strength of the U.S. and global economies. According to the S&P, it is expected that an improving U.S. economy continues to drive improving air travel demand over the next few months beginning at

Supply Chain Management Term Paper

4874 words - 20 pages directly order the products online. Their requirements for the product should be: ` 1) The audio product retails will need a medium quantity in the follow product types: 111,012,122,042,134; 2) The front-end manufacturers demand large quantity for a certain product type.: 042 for manufacturer 1 and 114 for manufacturer 2; 3) Each online order demands unique headsets, so I suppose each type has the same demand. The monthly forecast requirements can

Cmi5

2013 words - 9 pages " to save money in the long run to him for free updates. Customers the same benefits that are not assigned a value. Different pricing methods place varying degree of emphasis on selection, estimation, and evaluation of costs, comparative analysis, and market situation. Cost-plus pricing - a set of items for both the cost and the current volume, fixed costs, plus a certain profit to the price including the cost of production. For example

Similar Documents

Summary Of The Article Written By Joanna Stavins

624 words - 3 pages levels of MC. A negative effect of MC on price dispersion has been discovered by Borenstein and Rose in their 1994 study. An effective way to discriminate the nature of their customer is to attach some ticket restrictions to the cheaper one, causing the Higher Type of customer to dislike those kinds of fares. Dana highlighted that the discrimination techniques described above mainly affect the consumers with heterogeneous and uncertain demand

Economics Essay

566 words - 3 pages frequent users, the gross and net price elasticities are estimated to be -0.6 and -0.4 respectively; for occasional smokers, the figures are -0.3 and -0.1 The net elasticity figures are arrived at by excluding the effects of legalization. Demand Theory and Estimation Consumption of marijuana involves the risk of being caught and subsequently the risk of fines and/or imprisonment. Hence its net cost should be considered as a sum of its cost in

Economic Order Quantity Essay

1326 words - 6 pages unit is $10 per unit per annum. The company has a demand for 20,000 units per year. Calculate the order size, total orders required during a year, total carrying cost and total ordering cost for the year. Solution EOQ = SQRT(2 × 20,000 × 400/10) = 1,265 units Annual demand is 20,000 units so the company will have to place 16 orders (= annual demand of 20,000 divided by order size of 1,265). Total ordering cost is hence $64,000 ($400 multiplied

Microfridge Essay

596 words - 3 pages hot plate and a refrigerator would draw 20 amps whereas the unit he designed would never pull more than 10 amps of current. Financials To this end, he approached a number of major electronic goods’ manufacturers and Samsung and Sanyo agreed to consider its production. Sanyo offered to provide the product at the rate of $263 per unit. According to them, the estimation of upfront tooling payment was $170,000. Following that, Bennett added $300,000