Demand Estimation Paper and Excel Assignment
Demand Estimation
Nekishawa Ellis
Strayer University
Demand Estimation
For this assignment, one is to imagine that they work for the maker of a leading brand of low calorie, frozen microwavable food. The maker estimates a demand equation for its product. They use data from twenty-six supermarkets around the country for the month of April. To get a better understanding of how to solve the equation, one must first have a better understanding of demand estimation.
Demand estimation is a process that involves coming up with an estimate of the amount of demand for a product or service. One of the reasons that companies use demand estimation is to assist with pricing. When one has an idea of what the demand would be for the product, one knows approximately how much they have to price the product. With demand estimation, a company can gauge how much to produce and make other important decisions.
As one moves forward with tackling the assignment, one will first find that the elasticity must be computed for each independent variable. With the regression analysis, quality demand (QD) represents the equation QD = -5200 – 42P + 20PX + 5.211 + .20A + .25M. The product price (P) can have a negative relation to quality demand as well. The price of the leading competitor is represented by (PX). As price changes demand, this is the result (PX). Income is represented by (I). (A) stands for monthly advertising. As one advertises, the end result would be more sells. (M) represents the number of microwaves sold.
Within the equation, the price (P) is 500 (five hundred), (PX) is 600 (six hundred), the income (I) is 5,500 (five thousand five hundred), advertise (A) is 10,000 (ten thousand), and (M) is 5,000 (five thousand). After swapping the values and variables, the quality demand is utilized to solve in hopes of finding the total for quality demand. QD = -5200 – 42 (500) + 20 (600) + 5.2 (5,500) + .20 (10,000) + .25 (5,000) and when one completes the calculations, (QD)
Nekishawa Ellis
Strayer University
Demand Estimation
For this assignment, one is to imagine that they work for the maker of a leading brand of low calorie, frozen microwavable food. The maker estimates a demand equation for its product. They use data from twenty-six supermarkets around the country for the month of April. To get a better understanding of how to solve the equation, one must first have a better understanding of demand estimation.
Demand estimation is a process that involves coming up with an estimate of the amount of demand for a product or service. One of the reasons that companies use demand estimation is to assist with pricing. When one has an idea of what the demand would be for the product, one knows approximately how much they have to price the product. With demand estimation, a company can gauge how much to produce and make other important decisions.
As one moves forward with tackling the assignment, one will first find that the elasticity must be computed for each independent variable. With the regression analysis, quality demand (QD) represents the equation QD = -5200 – 42P + 20PX + 5.211 + .20A + .25M. The product price (P) can have a negative relation to quality demand as well. The price of the leading competitor is represented by (PX). As price changes demand, this is the result (PX). Income is represented by (I). (A) stands for monthly advertising. As one advertises, the end result would be more sells. (M) represents the number of microwaves sold.
Within the equation, the price (P) is 500 (five hundred), (PX) is 600 (six hundred), the income (I) is 5,500 (five thousand five hundred), advertise (A) is 10,000 (ten thousand), and (M) is 5,000 (five thousand). After swapping the values and variables, the quality demand is utilized to solve in hopes of finding the total for quality demand. QD = -5200 – 42 (500) + 20 (600) + 5.2 (5,500) + .20 (10,000) + .25 (5,000) and when one completes the calculations, (QD)
References: McGuigan, J.R., Moyer, R.C., & deB. Harris, F.H. (2014). Managerial economics: Applications, strategies, and tactics. Mason, OH: Cengage Learning