Reference no: EM132407379

Using Excel Solver write a report on the Oasis Water Company regarding their new brand of spring water.

Using the marketing data from the 15 test markets shown above, estimate the parameters of the linear empirical demand function. If any of the parameter estimates are not significant at the 5% level of significance, drop the associated explanatory variable from the model and estimate the demand function again.

a. What is the estimated linear demand function for Ozarka?

b. What percentage of the variation in sales of Ozarka is explained by your estimated demand function?

A "typical" market is one in which the price of Liquid Ozarka is $3.50 per gallon, the average household income is $45,000, the price of rival bottled water is $3 per gallon, and the population is 75,000. Answer the following questions for this "typical" market scenario.

c. What is the estimated elasticity of demand for Ozarka? Is demand elastic or inelastic? What would be the percentage change in price required to increase sales of Ozarka by 10 percent?

d. What is the estimated income elasticity of demand? Is Ozarka a normal or inferior good? A 6 percent increase in average household income would be predicted to cause what percentage change in sales of Ozarka?

e. What is the estimated cross-price elasticity of demand for Ozarka with respect to changes in the price of its rival brand of bottled water? Does the estimated cross-price elasticity have the expected algebraic sign? Why or why not? If the price of the rival brand of water rises by 8 percent, what is the estimated percentage change in sales of Ozarka?

Using the same marketing data, estimate the parameters for the log-linear empirical demand function. If any of the parameter estimates are not significant at the 5% level of significance, drop the associated explanatory variable from the model and estimate the demand function again.

f. What is the estimated log-linear demand function for Ozarka?

g. Does a log-linear specification work better than a linear specification of demand for Ozarka? Explain by comparing F-ratios, R-squares, and t-ratios (or p-values).

h. Using the estimated log-linear demand function, compute the price, income, and cross-price elasticities of demand. How do they compare to the estimated elasticities for the linear demand specification?

Write a 5-6 page academic report on your findings. Your report should follow the academic format that we use:
Title (Decide on a Title That Fits Content)

Introduction
Write 1 - 2 introductory paragraphs here. Include an objective summary.

Analysis
The analysis content is expected to be about 2 or 4 pages. You can add subtitles under this heading.

Discussion
Include a subjective summary/discussion of your analysis.

References

We will use APA style for references. Include at least 5 references, where a minimum will be one reference from my publications. You do not have to read the entire article; you can simply read the abstract and cite it accordingly.

Attachment:- Report on the Oasis Water Company.rar