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Imagine that you work for the maker of a leading brand of low calorie, frozen microwavable food that estimates the following demand equation for its product using date from 26 supermarkets around the country for the month of April.Option 1Note: The following is a regression equation. Standard errors are in parentheses for the demand for widgets.QD = -5200 - 42P + 5.21 .20A + .25M(2.002) (17.5) (6.2) (2.5) (0.09) (0.21)R2 = 0.55 n= 26 f= 4.88Your supervisor has asked you to compute the elasticities for each independent variable, Assume the following values for the independent variables :Q = Quantity demanded of 3 pack unitsP(in cents) = price of the product = 500 cent per 3 pack unitPx ( in cents) = price of the leading competitor's product = 600 cent per 3 pack unitI ( in dollars ) = per capital income of the standard metropolitan statistical area (SMSA) in which the supermarkets are located = $5500A ( in dollars ) = Monthly advertising expenditures = $10,000M = number of microwave ovens sold in the SMSA in which the supermarkets are located = 5,000 Option 2Note: The following is a regression equation. Standard errors are in parentheses for the demand for widgets.QD = -2000 - 100P + 15A + 25px + 10I(5234) (2.29) (525) (1.75) (1.5) (0.21)R2 = 0.85 n= 120 f= 35.25Your supervisor has asked you to compute the elasticities for each independent variable, Assume the following values for the independent variables :Q = Quantity demanded of 3 pack unitsP(in cents) = price of the product = 200 cent per 3 pack unitPx ( in cents) = price of the leading competitor's product = 300 cent per 3 pack unitI ( in dollars ) = per capital income of the standard metropolitan statistical area (SMSA) in which the supermarkets are located = $5000A ( in dollars ) = Monthly advertising expenditures = $640Write a four to six (4-6) page paper in which you:1. Compute the elasticities for each independent variable . Note : write down all your calculation2. Determine the implications for each of the computed elasticities for the business in terms of short - term and long term pricing strategies. provide a rational in which you cited your results.3.Recommend whether you believe that this firm should or should not cut its price to increase its market share. provide support for your recommendation4. 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 dollars1. plot the demand curve for the firm2. plot the correspondent supply curve on the same graph using the supply function Q =5200 + 45P with the same price3. determine the equilibrium price and quantity4. 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 condition could impact the demand for, and the supply, of the product 5. Indicate the crucial factors that could cause rightward shifts and leftward shifts of the demand and supply curves6. Use at least three (3) quality academic resources in this assignment.
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