Estimate the demand function for oranges in china

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Reference no: EM13225014

Shanghai Fruit Company produces and sells oranges in China. A marketing analyst collected data on price and quantity demanded for oranges from 2009 to 2011. The data are summarized in the following table:

Year P Q

2009 1 9

2010 2 7

2011 3 5

Where,

P is price of oranges (Yuan/Kg), and Q is quantity sold (Kg).

a. Estimate the demand function for oranges in China; that is, 0 1 Q = ? + ? P ;

b.Compute price elasticity of demand for oranges at the mean of the data;

c.In order to enhance total revenue from selling oranges, would you recommend a decrease in price of oranges? Why?

d. Calculate price elasticity of revenue;

e.What would be the effect of a 3% increase in price of oranges on total revenue?

f.What would be the effect of 2 % decrease in price of oranges on total revenue?

Reference no: EM13225014

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