Reference no: EM13199597
A food-products company has recently introduced a new line of fruit pies in six U.S. cities: Atlanta, Baltimore, Chicago, Denver, St. Louis, and Fort Lauderdale. Based on the pie's apparent success, the company is considering a nationwide launch. Before doing so, it has decided to use data collected during a two-year market test to guide it in setting prices and forecasting future demand.
For each of the six markets, the firm has collected eight quarters of data for a total of 48 observations. Each observation consists of data on quantity demanded (number of pies purchased per week), price per pie, competitors' average price per pie, income, and population. The company has also included a time-trend variable for each observation. A value of 1 denotes the first quarter observation, 2 the second quarter, and so on, up to 8 for the eighth and last quarter.
A company forecaster has run a regression on the data, obtaining the results displayed in the table.
Coefficient Standard Error of Coefficent Mean of Value of Variable
Intercept -4,516.3 4,988.2 ------
Price (dollars) -3,690.6 702.8 7.50
Competitor's
price (dollars) 4226.5 851.0 6.50
Income ($000) 777.1 66.4 40
Population(000) .40 .31 2,300
Time (1 to 8) 356.1 92.3 -----
N = 48. R2=.93. Standard error of regression = 1,442
a. Which of the explanatory variables in the regression are statistically significant? Explain. How much of the total variation in pie sales does the
regression model explain?
b. Compute the price elasticity of demand for pies at the firm's mean price: ($7.50) and mean weekly sales quantity (20,000 pies). Next, compute the cross-price elasticity of demand. Comment on these estimates.
c. Other things equal, how much do we expect sales to grow (or fall over the next year?
d. How accurate is the regression equation in predicting sales next quarter? Two years from now? Why might these answers differ?
e. How confident are you about applying these test-market results to decisions concerning national pricing strategies for pies?
|
Determine if the promise credible or not
: Two major networks are competing for viewer ratings in the 8:00-9:00 P.M. and 9:00-10:00 P.M. slots on a given weeknight. Each has two shows to fill this time period and is juggling its lineup. Is this promise credible.
|
|
How long would annual payments
: How many years would it take to have $50,000 for a home down payment if the first payment is made at the end of the upcoming year (year 1)?
|
|
What is its resulting output and profit
: Making dresses is a labor-intensive process. Indeed, theproduction function of a dressmaking firm is well described by theequation Q = L - L2/800, where Q denotes the number ofdresses per week and L is the number of labor hours per week.
|
|
Calculate barbows after-tax weighted average cost
: Calculate Barbows after-tax weighted average cost of capital, using the data in the balance sheet - One of the first items they want to examine is their cost of capital. According to the accounting department
|
|
How accurate is the regression equation in predicting sales
: Compute the price elasticity of demand for pies at the firm's mean price: ($7.50) and mean weekly sales quantity (20,000 pies). Next, compute the cross-price elasticity of demand. Comment on these estimates.
|
|
Determine the optimal asset allocation to make across
: Calculate the discrete monthly rates of returns. Using the monthly returns, calculate the arithmetic mean monthly return and the geometric mean monthly return of each series for the overall period. Convert the mean returns to annualised returns.
|
|
Determine the average product function
: Determine the mariginal product. Determine the average product function. Find the value of L that maximizes QFind the value of L at which the marginal product function takes on its maximum value.
|
|
Calculate the profit of each firm at the equilibrium
: Suppose that two identical firms produce widgets and that they are the only firms in the market. Their costs are given by C1 = 60Q1 and C2 = 60Q2, where Q1 is the output of Firm 1 and Q2 the output of Firm 2.
|
|
What are some viable alternatives to the problem
: how can we as a country can provide universal health coverage. Approximately 47 million individuals in the U.S. are uninsured or underinsured. What might this mean in terms of future growth in the U.S. In addition,
|