Assignment 1: Making Decisions Based on Demand and Forecasting

Topics: Price elasticity of demand, Pizza, Supply and demand Pages: 4 (1351 words) Published: June 10, 2013
Making Decisions Based on Demand and Forecasting

ECO 550

1.Report the demographic and independent variables that are relevant to complete a demand analysis providing a rationale for the selection of the variables. (Independent variables are the variables that have effect on the demand of Pizza). List 5 and explain the effect of each of them on the demand of Domino’s Pizza. I currently reside in Allentown, Pennsylvania, which has a current population, based off of the 2010 Census data, of 118,032 people. The large amount of people that reside in the 18 square mile city, which is the third largest in the state, allows for huge competition amongst the local chain and privately owned pizza restaurants. Within the city limits of Allentown, Pennsylvania, there are 3 Domino’s pizza restaurants within 13.2 miles of each other. The average median income per household is $49,025 and $37,356 per family. This can affect the demand of pizza based on the price of the pizzas being sold. The lower the income of a family is, the lesser the chances they will purchase take-out or fast food. Typically, families that are on a fixed or smaller income will live on a budget and normally that does not include the luxury of eating out. Looking at the price of various Domino’s Pizza, Pizza Hut and various local pizza restaurants, the average cost of a large, plain cheese pizza pie is $10.42. While this may be a good price to some, families with a higher number of members may not be willing to pay $10+ per pizza due to the fact that they most likely have to purchase in multiple quantities. 15 percent of the Allentown, Pennsylvania population get around by means of transportation other than a car, therefore a pizza restaurant offering delivery services will be a benefit to those not able to pick their pizza up. The local average fee for pizza delivery is $2.00, based off of two of the large chain pizza restaurants delivery fees. The local privately owned pizza...
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