Briefly explain the importance of forecasting for managers, Managerial Economics

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Question:

i) Briefly explain the importance of forecasting for managers?

ii) To what extent will managers rely on surveys in business forecasting?

iii) What do you meant the quantitative methods of forecasting?

iv) Consider John Corporation is a personal computer retailer. The company hires an economist to determine the demand for its product and reports the following equation:

Qa = 100 - 2Pa + Pb + 0.5Y

where Qa is the demand for the company's product, Pa is the price charged by the company, Pb is the price of computers from another company and Y is the income per capita.

a. Evaluate whether demand is elastic or not.

b. Evaluate the cross elasticity of demand. Are the products substitutes or complements. Describe

c. Evaluate the income elasticity of demand. Interpret your result.

Pa = 10
Pb = 2
Y = 50


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