Find out the demand estimation

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Reference no: EM133079159

(Demand Estimation). 

You run a firm that manufactures snowboards and sells snowboards in Colorado.  You want to know how changing prices will affect your firm's revenues and profits.  you decide to run a market experiment. 

Between November and February, your firm charges $240 for its most popular kids snowboard.  Over this period, you sell an average of 6,000 snowboards per month.  In March, you raise the price to $260 per month.  Your sales plummet to 1,000 snowboards per month between March and June. 

Assuming that your firm's demand function is linear (i.e., , estimate your demand function.

1. Find the "b" parameter in the linear demand function.    Answer for 1 is B= 250

2. Find the "a" parameter in the linear demand function.  Answer for 1b  is A= 66,000

I need help with the following question:

  1. Do you think this market experiment is likely to lead to an accurate estimate of demand for your firm's product?  EXPLAIN WHY OR WHY NOT.

Reference no: EM133079159

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