Fnd out implications for each of computed elasticities

Assignment Help Microeconomics

Reference no: EM13395801

The following is a regression equation for the demand for low-calorie microwavable food. Standard errors are in parentheses.

Q = - 5200 - 42P + 20PX + 5.2I + .20A + .25M

(2.002) (17.5) (6.2) (2.5) (0.09) (0.21)

R² = 0.55 n = 26 F = 4.88

Assume the following values for the independent variables:

Q = Quantity sold per month

P (in cents) = Price of the product = 500

PX (in cents) = Price of leading competitor's product = 600

I (in dollars) = Per capita income of the standard metropolitan statistical

area (SMSA) in which the supermarkets are located = 5,500

A (in dollars) = Monthly advertising expenditures = 10,000

M = Number of microwave ovens sold in the SMSA in which the

supermarkets are located = 5,000

Write a four to six (2-3) page paper in which you:

Compute the elasticities for each independent variable.
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.
Recommend whether you believe that this firm should or should not cut its price to increase its market share. Provide support for your recommendation.
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 dollars.
1. Plot the demand curve for the firm.
2. Plot the corresponding supply curve on the same graph using the supply function Q = 5200 + 45P with the same prices.
3. Determine the equilibrium price and quantity.
4. Outline the significant factors that could cause changes in supply and demand for the product. 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.
Indicate the crucial factors that could cause rightward shifts and leftward shifts of the demand and supply curves.
Use at least three (3) quality academic resources in this assignment.

Reference no: EM13395801

Questions Cloud

What is time costing - explain with an example what are the : a what is flexible budgeting - explain with an example. why have flexible budgets? justify.b what is time costing -

As the rate of innovation increases companies face : as the rate of innovation increases companies face expanding productservice lines shorter product and service

Explain why are enzymes critical to the function of cells : 1 why are enzymes critical to the function of cells? that is why not simply let chemical reaction occur without

Fitzgerald et al 1989 identified four unique : 1.nbsp what led to the development and emergence of the balanced scorecard?2.nbsp which author championed the balanced

Fnd out implications for each of computed elasticities : the following is a regression equation for the demand for low-calorie microwavable food. standard errors are in

In brief describe the function of xylem and phloem what are : 1 to what kingdom would a single-celled nucleated photosynthetic organism belong? 2 what clues indicate that dogs are

Things that must be made clear includes business models : 1. critically evaluate the strategic importance of interactive marketing and demonstrate an ability to appraise the

Hadicke company bought a delivery truck for 45000 on : hadicke company purchased a delivery truck for 45000 on january 1 2012. the truck was assigned an estimated useful life

List all the steps of mitosis and in brief explain what : 1 assume the gene for dimples d is recessive. then assume that two individuals with the genotypes dd and dd mate.

User Account

All Pages