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…

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