Plot the demand curve for the firm

Reference no: EM13814438

Imagine that you work for the maker of a leading brand of low-calorie, frozen microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April.

For a refresher on independent and dependent variables, please go to Sophia's Website and review the Independent and Dependent Variables tutorial, located at https://www.sophia.org/.../independent-and-dependent-variables....
Option 1

Note: The following is a regression equation. Standard errors are in parentheses for the demand for widgets.

QD = - 5200 - 42P + 20PX + 5.2I + 0.20A + 0.25M

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

R2 = 0.55 n = 26 F = 4.88
Your supervisor has asked you to compute the elasticities for each independent variable. Assume the following values for the independent variables:
Q = Quantity demanded of 3-pack units

P (in cents) = Price of the product = 500 cents per 3-pack unit

PX (in cents) = Price of leading competitor's product = 600 cents per 3-pack unit

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
Option 2

Note: The following is a regression equation. Standard errors are in parentheses for the demand for widgets.
QD = -2,000 - 100P + 15A + 25PX + 10I

(5,234) (2.29) (525) (1.75) (1.5)

R2 = 0.85 n = 120 F = 35.25
Your supervisor has asked you to compute the elasticities for each independent variable. Assume the following values for the independent variables:
Q = Quantity demanded of 3-pack units

P (in cents) = Price of the product = 200 cents per 3-pack unit

PX (in cents) = Price of leading competitor's product = 300 cents per 3-pack unit

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

(SMSA) in which the supermarkets are located = $5,000

A (in dollars) = Monthly advertising expenditures = $640
The Answer scored 90% so its not entirely correct
Write a two (2) page paper in which you:

1. Compute the elasticities for each independent variable. Note: Write down all of your calculations.

2. 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 cents.

a. Plot the demand curve for the firm.

b. Plot the corresponding supply curve on the same graph using the following MC / supply function Q = -7909.89 + 79.1P with the same prices.

c. Determine the equilibrium price and quantity.

d. Outline the significant factors that could cause changes in supply and demand for the low-calorie, frozen microwavable food. 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.

Reference no: EM13814438

Questions Cloud

Key differences between the juvenile and adult systems : Write a 700- to 1,050-word paper summarizing the key parameters of the juvenile justice system in the United States. Address the following: Key differences between the juvenile and adult systems

Specific purpose of an acceptable use policy : Question 1: What is the specific purpose of an acceptable use policy?

Would you deem karina disabled under the adaaa : Answer the following questions relating to ADA expanded by the ADAAA. Would you deem Karina disabled under the ADAAA? If so, what reasonable accommodations would you offer to her

Manager of a large department in a company : Assume that you were a manager of a large department in a company, and you received a request from your supervisors to supply laptops equipped with Wi-Fi and mobile broadband.

Plot the demand curve for the firm : Compute the elasticities for each independent variable and Plot the demand curve for the firm.

What do you mean by intellectual property : What do we mean by "intellectual property"? What are the differences between intellectual property and real property? Should someone be able to own intellectual property? Why or why not?

Identify the factors that would impact the demand : Identify the factors that would impact the demand for the product that you have selected. If you wish to develop a forecast of the demand for this product in a future month (or for other appropriate time period), identify what type of forecasting ..

What is the role of ethics in business : What is the role of ethics in business? Prepare a paper that addresses the following:

Analyze kodaks horizontal and vertical integration strategy : Analyze Kodak's horizontal and vertical integration strategy and determine the corporate level strategy that is more appropriate for the company to establish a competitive advantage in the Cloud service industry.

User Account

All Pages