Demand Estimation : Price Elasticity Of Demand Essay

1274 Words Jul 19th, 2015 null Page
Demand estimation is a process that involves coming up with an estimate of the amount of demand for a product or service. The estimate of demand is typically confined to a particular period of time, such as a month, quarter or year. While this is definitely not a way to predict the future a business, it can be used to come up with fairly correct estimates if the assumptions made are right (Arthur, 2015). So, using data collected from 26 supermarkets around the country for the month of April and the regression equation provide we will present the demand estimation for our leading brand of low-calorie, frozen microwavable food and discuss the different factors affecting the shift in the demand.

2. Implications of each computed elasticity for the business in terms of short-term and long-term pricing strategies.
- Price elasticity of demand (ED)
The price elasticity of demand (ED) is “ the percent change in quantity demanded per time period that occurs as a result of some percentage change in price” (McGuigan, et. al, 2014). It is used to see how sensitive the demand for a good is to a price change. Demand tends to be more elastic in the long rung rather than in the short run, because when prices change consumers often need more time to respond and change their shopping habits. However, in the short run, the demand for goods may be inelastic as it is the case with our company, which (ED) is -1.19, because it may take time to our consumers to both notice and then respond to…

Related Documents

• Eco 550 Essay

Assignment 1: Demand Estimation Assignment 1: Demand Estimation ECO550 Managerial Economics and Globalization January 29, 2014 1 2 Assignment 1: Demand Estimation Compute the elasticities for each independent variable. Note: Write down all of your calculations. QD = - 5200 - 42P + 20PX + 5.2I + .20A + .25M (2.002) (17.5) (6.2) (2.5) (0.09) (0.21) R2 = 0.55 n = 26 F = 4.88 Your supervisor has asked you to compute the elasticities for each independent variable. Assume the following values…

Words: 1460 - Pages: 6

Introduction The purpose of this academic essay is to establish the differences between demand analysis and demand estimation while describing the importance of each to firms with regard to managerial economics. This document will also explore price elasticity and its relation to marginal revenue and profit maximization. The significance of this essay for the student body audience is to provide a canopy for integrated learning economical concepts and their application to real world scenarios…

Words: 517 - Pages: 3
• Essay Managrial Economics Project

MANAGIRAL ECONOMICS PROJECT 1 | Estimation of the Demand for Combo 1 meals | | Corey Siragusa 106549438 | Yujing Zhang 108672624 | Gary Zhao 108693441 | 11/7/2012 | a) Using the data in Table 1, specify a linear functional form for the demand for Combination 1 meals, and run a regression to estimate the demand for Combo 1 meals. According to the passage, we know that the Quantity of meals sold by Combination (Q) is related to the average price charged (P) and the dollar amount…

Words: 881 - Pages: 4
• Assignment 3 Essay

Introduction It would be impossible for any business to survive if there were no demand for their product. Therefore, one of the most important attributes of managerial economics is demand estimation. Demand estimation is an important tool because it helps the managers to estimate demand using a scientific method known as Econometrics. It is essential for a manager to be able to determine the appropriate variables of demand function, according to the textbook, Managerial Economics Applications: Strategies…

Words: 1453 - Pages: 6
• Eco 550 Week 3 Assignment 1 Essay

Demand Estimation | [Type the document subtitle] | | Professor: Dr. Camille Castorina | | ECO 550: Managerial Economics and Globalization | 7/21/2014 | | In this assignment we will look at a certain scenario that involves estimating the demand of a product when certain variables are put into place. So first thing is understanding what is demand and how does it apply in Economics. “The law of demand states that when the price of a good rises, the amount demanded falls, and when…

Words: 880 - Pages: 4
• Essay about Elasticity of Demand for Lottery Tickets

Elasticity of Demand for Lottery Tickets Elasticity is the responsiveness of demand or supply to the changes in prices or income. There are various formulas and guidelines to follow when trying to calculate these responses. For instance, when the percentage of change of the quantity demanded is greater then the percentage change in price, the demand is known to be price elastic. On the other hand, if the percentage change in demand is less than then the percentage change in price; Like…

Words: 1480 - Pages: 6
• Essay Injectable Epinephrine Used For Treating Allergic Reactions

contract manufacturer for it. In 2009, Mylan started marketing a new version of EpiPen with the same basic mechanism but with a stronger spring, better safety features, and more clear markings and instructions. Since Mylan acquired the EpiPen 2007, the price for a two-pack has gone up from \$93.88 to \$608.61, an increase of more than 500 percent, which is a stark contrast with its manufacturing cost as it is believed that Mylan pays no more than \$30 per device. When Mylan acquired the EpiPen, the drug…

Words: 1350 - Pages: 6
• Essay on Demand

Demand Estimation Trevor Shipp 23 July 2015 Managerial Economics Dr. Juliet U Elu Introduction Today we will be examining our tactics in how we have become the leading brand in providing low-calorie, microwavable frozen foods. We have collected data from approximately 26 supermarkets across the country for the month of April. The firm will attempt to pinpoint an estimate of our consumer demand to aid us in making our next move. First, we will compute the elasticities of all independent…

Words: 1485 - Pages: 6
• Demand Estimation & Forecasting Essay

UNIT 6 DEMAND ESTIMATION AND FORECASTING Objectives By studying this unit, you should be able to: identify a wide range of demand estimation and forecasting methods; apply these methods and to understand the meaning of the results; understand the nature of a demand function; identify the strengths and weaknesses of the different methods; understand that demand estimation and forecasting is about minimising risk. Structure 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 Introduction Estimating Demand Using…

Words: 9473 - Pages: 38
• Price Elasticity of Computers Essay

TRANSACTIONS ON ENGINEERING MANAGEMENT, VOL. 46, NO. 2, MAY 1999 Price Elasticity and the Growth of Computer Spending Kar Yan Tam and Kai Lung Hui Abstract—Recent works have indicated that the price of computers is a key factor in explaining the growth of computer spending. However, it remains unclear whether the price elasticity of the demand for computers is constant over time. Findings on the pattern of price elasticity will have important implications in the study of information technology…

Words: 9017 - Pages: 37