Compute elasticities for each independent variable

Reference no: EM1396349

Imagine that you work for the maker of a leading brand of low-calorie microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April.

For a refresher on independent and dependent variables, please go to Sophia's Website and review the Independent and Dependent Variables.

Write a four to six (4-6) page paper in which you:

Compute the elasticities for each independent variable.Note:Write down all of your calculations.

Determine the implications for each of the computed elasticities for the business in terms of short-term and long-term pricing strategies.

Provide a rationale in which you cite your results.

Recommend whether you believe that this firm should or should not cut its price to increase its market share. Provide support for your recommendation.

Assume that all the factors affecting demand in this model remain the same, but that the price has changed. Further assume that the price changes are 100, 200, 300, 400, 500, 600 dollars.

Plot the demand curve for the firm.

Plot the corresponding supply curve on the same graph using the supply function Q = 5200 + 45P with the same prices.

Determine the equilibrium price and quantity.

Outline the significant factors that could cause changes in supply and demand for the product. Determine the primary manner in which both the short-term and the long-term changes in market conditions could impact the demand for, and the supply, of the product.

Indicate the crucial factors that could cause rightward shifts and leftward shifts of the demand and supply curves.

Your supervisor has asked you to compute the elasticities for each independent variable. Assume the following values for the independent variables:

Q = Quantity demanded

P (in cents) = Price of the product = 8,000

PX (in cents) = Price of leading competitor's product = 9,000

I (in dollars) = Per capita income of the standard metropolitan statistical area (SMSA) in which the supermarkets are located = 5,000

A (in dollars) = Monthly advertising expenditures = 64

Reference no: EM1396349

Questions Cloud

Explain how this risk would be offset by a combination : Explain how this risk would be offset by a combination of a 15-year Euro Dollar Bond with equal repayments in the last five years also a floating rate 10 year syndicated Euro-Dollar bank loan combined with an interest rate swap. Suppose a fifteen-..

Find the binomial and poisson probability : If 200 passengers take this flight, find the binomial and Poisson probability of no platinum flyers (round your answer to 4 decimal places).

Correlation regression and determination : The city council of Pine Bluffs is considering increasing the number of police in an effort to reduce crime. Before making a final decision,

Illustrate what is the remaining margin in her account : If the share price falls to $30 per share by the end of the year, illustrate what is the remaining margin in her account? If the maintenance margin requirement is 30%, will she receive a margin call?

Compute elasticities for each independent variable : Your supervisor has asked you to compute the elasticities for each independent variable - Compute the elasticities for each independent variable.

Distinguish treatment of adam and eve of different author : Distinguish the treatment of Adam and Eve in St. Augustine's City of God, Dante's Divine Comedy, Milton's Paradise Lost, and Collier's Milton's Paradise Lost.

Evaluating strategic competitive partnerships : To become a more value driven organization, Pokrah University is holding regular coffee-hour discussions with its students also is surveying its graduates regarding student educational needs also desires.

What does the binomial distribution chart look like : What does the binomial distribution chart look like? Can I use Excel to come up with this chart?

Explain components of the building block : What are the building blocks that make up our genes? What are the three components of the building block?

User Account

All Pages