Explain how gbm uses effective time to account

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Case: Dataset "Final_Q2_ColorTV" records the annual sales (in millions) and price levels of Color TV in 1961-1970, the first ten years since its launch. Assume consumers do not repeat purchase. Answer the following questions by estimating the Generalized Bass Model.

Year Time Sales Price
1961 1 0.147 610
1962 2 0.438 566
1963 3 0.747 555
1964 4 1.463 551
1965 5 2.646 560
1966 6 5.118 535
1967 7 5.777 525
1968 8 5.982 521
1969 9 5.962 515
1970 10 4.631 505

a. Explain how GBM uses effective time to account for the impact of prices on the diffusion process of Color TV.

b. Estimate the GBM for Color TV. How many consumers will eventually adopt Color TV according to the result?

c. Predict the total already adoptions for Color TV in 1975. Suppose the price of Color TV is 450 in 1975. [Hint: You need to first calculate the effective time of year 1975 for Color TV.]

Reference no: EM133345384

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