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The make of a leading brand of low-calorie microwavable food

Paper help Economics The make of a leading brand of low-calorie microwavable food

Economics

The make of a leading brand of low-calorie microwavable food

The make of a leading brand of low-calorie microwavable food estimated the following demand equation… Show more The make of a leading brand of low-calorie microwavable food estimated the following demand equation for its product using data from 26 supermarkets around the contry for the month of April: q = -5200 – 42p + 20px + 5.2l + 0.20a + 0.25m (2002) (17.5) (6.2) (2.5) (0.09) (0.21) r2 = 0.55 n = 26 f = 4.88 Assume the following values for the independent variables q=quantity sold per month p (in cents) = price of the product = 500 (in cents) px (in cents) = price of leading competotior’s product = 600 i (in dollars) = per capita income of the standard metropolitan tatistiacal arwa (SMSA) in which the supermarket is located = 5500 a ( indollars) = monthly advertising expenditure = 10000 m = number if microwaves sold in the SMSA in which the supermarket is located = 5000 Using this information answer the following. a. Compare elasticities for each variable. b How concerned do you think this company would be about the impact of a recession on its sales? Explain. c. Do you think that this firm should cut its price to increase its market share.? Explain., d. What proportion of the variation in sales is explained by the independet variables in the equations? How confident are you about this explain. • Show less

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