How concerned must company be about impact of recession on

Reference no: EM13394303

The maker of a leading brand of low-calorie microwavable food estimated the following demand equation for its product using data from 26 supermarkets around the country for the month of April:

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

Y (in dollars) = per capita income = 5,500

A (in dollars) = monthly advertising expenditure = 10,000

M = number of microwaves sold in the market = 5,000

a. Compute the elasticities for each variable

b. How concerned should the company be about the impact of a recession on its sales? Explain.

c. Do you think the company should cuts its price to increase its market share? Explain.

d. How confident are you about the results from this estimation? Explain.

Reference no: EM13394303

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