Demand Estimation by Regression Method – Some Statistical Concepts for application ( All the formulae marked in red for remembering. The rest is for your concept)

In case of demand estimation working with data on sales and prices for a period of say 10 years may lead to the problem of identification. In such a case the different variables that may have changed over time other than price, may have an impact on demand more rather than price. In order to void this problem of identification what we adopt is the techniques of demand estimation through regression process in order to distinguish the effects of different variables on demand. In order to understand the basic working and application of the model, let us start with two variable model

Two-variable Regression model
To find out the relation between two variables X & Y, usually a linear relation is estimated. If it is non-linear one then we convert it into log-linear to estimate the equation. Among the scatter of points in plane X-Y, we try to fit in the best line that can estimate the relationship. Here Y is the dependent variable and X is the independent variable. Let us take the example given in Salvatore. Let demand be the function of advertisement expenditure by the particular firm. Then the scatter diagram will show as the ad. Exp. Increases the sales volume will rise. In order to estimate the relationship of Sales (Y), on ad. Exp. (X), we regress the following equation,

In order to establish this relation we need to estimate a and b with the help of the data set on Y and X. we use a technique called ordinary least squares technique in order to find out the best fitted line. In order to do so, we minimize the sum of squared errors (measure of overall variation of estimated sales from observed sales), assuming that the sum of error is equal to zero. Thus the error is given by,

Thus we need to minimize the above in such a way that the estimated values minimize the above error variance....

...
DemandEstimation
Seydou Diallo
Strayer University
ECO 550: Managerial Economics
Dr. Fereidoon Shahrokh
November 4, 2014
Background
I work for Snack-Eeze. We are the leading brand of low-calorie, frozen microwavable food. We estimate the following demand equation for our product using the data from 26 supermarkets around the country for the month of April.
QD = -2,000 - 100P + 15A + 25PX + 10I
(5,234) (2.29) ...

...
DemandEstimation
Dhruvang kansara
Eco 550, Assignment 1
Professor: Dr, Guerman Kornilov
January 27, 2014
1. Compute the elasticity for each independent variable. Note: Write down all of your calculations.
According to our Textbooks and given information, When P = 8000, A = 64, PX = 9000, I = 5000, we can use regression equation,
QD = 20000 - 10*8000 + 1500*64 + 5*9000 + 10*5000 = 131,000
Price elasticity =...

...Introduction
This presentation on RegressionAnalysis will relate to a simple regression model. Initially, the regression model and the regression equation will be explored. As well, there will be a brief look into estimated regression equation. This case study that will be used involves a large Chinese Food restaurant chain.
Business Case
In this instance, the restaurant chain's management wants to...

...Quantitative Methods Project
RegressionAnalysis for the pricing of players in the
Indian Premier League
Executive Summary
The selling price of players at IPL auction is affected by more than one factor. Most of these factors affect each other and still others impact the selling price only indirectly. The challenge of performing a multiple...

...Economics: DemandAnalysisDemandDemand is the quantity of good and services that customers are willing and able purchase during a specified period under a given set of economic conditions. The period here could be an hour, a day, a month, or a year. The conditions to be considered include the price of good, consumer’s income, the price of the related goods, consumer’s preferences, advertising expenditures and so on. The amount of the...

...CASE EXERCISE
SOFT DRINK DEMANDESTIMATION
PREPARED BY
GROUP
:NIK NORMIE EDAYU BT. HJ. NIK HIM
: BM 770 (evening track)
MATRIX NO. : 2011913361
SUBMITTED TO
: DR. AZLINA BT. HANIFF
Demand can be estimated with experimental data, time-series data, or cross-section
data. Sara Lee Corporation generates experimental data in test stores where the
effect of an NFL-licensed Carolina Panthers logo on Champion sweatshirt sales can be...

...TUTORIAL 1: DEMAND THEORY
1a)
The demand curve for haircuts at Terry Bernard’s Hair Design is P = 15 – 0.15Q where Q is the number of cuts per week and P is the price of a haircut. Terry is considering raising her price above the current price of RM9. Terry is unwilling to raise price of the price hike will cause revenue to fall. Should Terry raise the price of haircuts above RM9? Why or why not?
b)
Terry is trying to decide on the number of...

...STA9708
RegressionAnalysis: Literacy rates and Poverty rates
As we are aware, poverty rate serve as an indicator for a number of causes in the world. Poverty rates are linked with infant mortality, education, child labor and crime etc. In this project, I will apply the regressionanalysis learned in the Statistics course to study the relationship between literacy rates and poverty rates among different states in USA. In my study, the...

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