User Account

All Pages

Calculate the own price elasticity

Assignment Help Business Economics
Reference no: EM133128237

SHOW ALL DETAILED CALCULATIONS.

Suppose the following Demand equation is estimated for the most popular printers by using regression analysis:  One example for Epson printer is as follows:

                                          (standard errors in parentheses.)

                     Qx =    5500      -     10 Px    +  0, 75 Ad    -  3. 4 Py    +   0.58 Inc

                                 (1,732)         (2.29)          (1.36)           (1.75)           ( 0.15)

R2 = 0.65

Standard error of estimate = 34.3

Q =  Quantity demanded

Px = Price of an Epson printer = $500

Ad = Monthly advertising expenditures (in thousands) 40 K = use 40 for calculations

Py = price of a related good = $350

Inc = average monthly income of buyers = $8,000

Answer the following questions based on the above equation and the data provided.  (Show all work to receive full / partial credit)

  • Using the information given above, calculate the own price elasticity? Given your calculations, should Epson increase or reduce the price to maximize revenues
  • Calculate the advertising elasticity and show the impact of advertising on sales. Is it effective?  If it is not, what other measures can Epson adopt to market their product to increase sales
  • Calculate the cross-price elasticity of demand for Epson printers? Is the related good a substitute or complement? Why?
  • Calculate the income elasticity of demand. What and how much impact will a recession leading to a drop in the average income by 5% on sales of this product?  Why?
  • Which regression coefficients are statistically significant? Why? What does R2 actually mean?  Explain?  What steps can be taken to increase it to a higher level?

Reference no: EM133128237

Questions Cloud

International trade has been great boon for many countries : International trade has been a great boon for many countries and, in general, has been more beneficial for the world than not.
Challenge for people in low income areas : Why is going to college or finding a job a challenge for people in low income areas?
Define what technological paradigm shift : Define, provide significance of and provide an example of: Disruptive Technology. Define what a Technological Paradigm Shift is and provide a specific example.
Prepare a personal balance sheet : Prepare a personal balance sheet using the format you have learned for a classified balance sheet for a company. For the equity account, use Owner's Equity
Calculate the own price elasticity : Suppose the following Demand equation is estimated for the most popular printers by using regression analysis: One example for Epson printer is as follows:
Propagating project management culture : A PMO plays a major role in propagating the project management culture in any organization.
How much must they charge for each job to break even : Speedy graphic design store plans to sell 62 jobs next week, at an average cost of $325 each. How much must they charge for each job to break even
KIT506 Software Application Design and Implementation : KIT506 Software Application Design and Implementation Assignment Help and Solution, University of Tasmania - Assessment Writing Service
How/why did conflict escalate : How/why did the conflict escalate? What would the student have done differently, based on what he or she has learned in the class?

Reviews

Write a Review

Business Economics Questions & Answers

  Use labor-leisure model to illustrate graphically

For each group identified in bold type below, use labor-leisure model to illustrate graphically and then explain the change in the quantity of leisure (and labor) desired. Be sure to explain how the group’s labor force participation rate is affected.

  What is the effect on the real and nominal returns

1. There are two goods, food and clothing, and two factors, capital and labor, used to make these goods. Both goods are made by this country to begin with.

  Long-run effects of rise in safe-haven capital inflow

In the five years ending 2011, Switzerland enjoyed a fiscal surplus that averaged 1.3% of GDP, a trade surplus that averaged 2.6% of GDP, and a government debt to GDP ratio that averaged 40%. Use the appropriate graphs for a small open economy to ill..

  Accomplish their learning activities

How can a college student successfully manage their time during the week to accomplish their learning activities?

  What is the b-c ratio for the project

The value of the recreation has been conservatively set at$0.50 per hour. At a discount rate of 3% per year, what is the B/C ratio for the project?

  Appliance manufacturer is doing regression analysis

Suppose an appliance manufacturer is doing a regression analysis, using quarterly time-series data, of the factors affecting its sales of appliances. What techniques might be used to remove this autocorrelation from the model?

  What is this grand prize really worth

A lottery claims its grand prize is $10 million, payable over 5 years at $2,000,000 per year. If the first payment is made immediately, what is this grand prize really worth? Use an interest rate of 6%. Need to show formulas in excel.

  Define the assessment process

Define the assessment process as an integral process to teaching and learning Economics.

  Malaysia-new zealand exchange rate

Suppose the U.S. dollar-New Zealand dollar exchange rate, E$/NZ, is equal to .8, and the U.S.dollar-Malaysia ringgit exchange rate, E$/Malaysia, is .5. Accordin

  Purchasing american properties

How would this impact the foreign exchange market for the koruna and the dollar? How would the changing value of the dollar impact American exports?

  Respective estimated results in terms of budget surpluses

You have two sets of estimates of national account numbers for a closed economy for next year. In the first set, government expenditures will be $30 billion, transfer payments will be $10 billion, and taxes will be $45 billion. Based on these numbers..

  Purchase the oven with internal financing

Suppose instead that you expect your costs and your prices to increase by 3 percent. But the price of the oven is still $10,000. Do you change your decision about whether to purchase the oven with internal financing? Do you change your decision ab..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd