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Words 1211

Pages 5

Use the following demand equation concerning the questions of this assignment. This equation has been estimated through linear regression. The independent variables are: price of the product discussed in this assignment (P), advertising expenditure (A), price of leading competitor’s product (C), per capita income (I) in the area, and number of microwave ovens sold in the area. The standard errors of estimation are in parentheses below the equation.

QD = - 5200 – 42P + 20C + 5.2(I) + 0.20(A) + 0.25(M)

(2) (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 for the independent variables:

QD = Quantity demanded

P (in cents) = Price of the product = 500

C (in cents) = Price of leading competitor’s product = 600

I (in dollars) = Monthly average income in the area = 5,500

A (in dollars) = Monthly advertising expenditures = 10,000

M = Number of microwave ovens sold in the area = 5,000

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

When P = 500, C = 600, I = 5500, A = 10000 and M = 5000, using regression equation,

QD = -5200 - 42*500 + 20*600 + 5.2*5500 + 0.2*10000 + 0.25*5000 = 17650

Price elasticity = (P/Q)*(dQ/dP)

From regression equation, dQ/dP = -42.

So, price elasticity EP= (P/Q) * (-42) = (-42) * (500 / 17650) = -1.19

Likewise,

EC = 20 * 600 / 17650 = 0.68

EI = 5.2 * 5500 / 17650 = 1.62

EA = 0.20 * 10000 / 17650 = 0.11

EM = 0.25 * 5000 / 17650 = 0.07

2. Determine the implications for each of the computed elasticities for the business in terms…...

...Making Decisions Based on Demand and Forecasting Sylvia Evans Dr. Elkanah Faux ECO 550 January 27, 2013 Strayer University In this assignment I will be discussing the t that Domino’s is considering entering the marketplace in my community of Waynesboro, GA. I have conducted research to gather information in regards to demand for this business based on population, average income per household and average cost of pizza in this particular area. The end results of this research and demand analysis we should be able to determine if this would be a wise investment move to make on Domino’s behalf. Waynesboro is a fairly small town located in Burke County, GA. The current population for this town is about 5,781(www.city-data.com). The median income per household in my city from 2001 to 2011 has ranged from an estimate of about $27,166 to about $31,188 for the current day. The average cost of pizza from other pizza places over the years (2001-2011) ranged anywhere from $5.00 to about $18.00 depending on what you want and how you want it prepared. As far as household sizes they would range from about 1 person to about 5 people on average and the number of pizzas were hypothetically ordered were based on the number of people per household and how much income they were making. The more kids that are in a household the better the chances are of ordering pizza since it is no secret that kids love pizza. Another factor to consider would be single individuals who work long hours......

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...“Making Decisions Based on Demand and Forecasting" Shemika L Jamison Dr. Petter Wui April 25, 2013 Eco550 Managerial Economics & Global Founded in 1960, Domino's Pizza is the recognized world leader in pizza delivery. Domino's is listed on the NYSE under the symbol "DPZ." As of the first quarter of 2012 and through its global footprint, primarily made up of locally-owned and operated franchises, Domino's operated a network of 9,810 franchised and company-owned stores in the United States and over 70 international markets. Each day, more than 1 million customers enjoy hot, delicious Domino’s Pizza products on every inhabited continent on Earth. Around the world, Domino’s Pizza is dedicated to a single-minded focus of providing great-tasting pizza delivered directly to your door. Pioneered as a pizza delivery business, sells more than 400 million pizzas worldwide every year. Domino’s currently has over 3,500 stores outside of the United States in over 60 international markets, and still growing. Report the demographic and independent variables that are relevant to complete a demand analysis providing a rationale for the selection of the variables. For this study I use the number of household in different communities (counties in Milwaukee), Median Income of the households in the county, the price of pizza, the price of Soda, and average spending in advertising by Dominos as independent variables. ...

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...nment Assignment 1 “Making Decisions Based on Demand and Forecasting” Strayer University ECO 5550 – Managerial Economics and Globalization May 12, 2013 Making Decisions Based on Demand and Forecasting There are several demographic and independent variables which are relevant in completing a demand analysis for pizza in Loudoun County, Virginia. The first variable that I used in completing my demand analysis is the average cost per pizza in the Loudoun County, Virginia area. The average cost of pizza is imperative in completing a demand analysis, because consumers in Loudoun County, Virginia have several choices in pizza companies vying for their attention. The second variable that I used was the sales revenue for Domino’s Pizza domestic stores for the quarters ranging from the first quarter of 2010 to the first quarter of 2013. Once I obtained the sales figures for the quarters ranging from the first quarter of 2010 to the first quarter of 2013, I then divided the sales revenue in order to obtain the average sales revenue for each domestic store. In order to complete a demand analysis, and forecasting income for future periods one must be able to know the relationship between the average sales per store, and the consumers who are demanding the product. The third variable that I used in completing my demand analysis is median income for Loudoun County, Virginia. Median income is significant for two reasons; first one can tell if the median income can afford......

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...(6.2) (2.5) (0.09) (0.21) Qd= -5200 – 42(500) + 20(600) + 5.2(5,500) + .20(10,000) + .25(5,000) Qd= -5,200 – 21,000 + 12,000 + 28,600 + 2,000 + 1,250 = 17,650 Price of the product elasticity= -42(500/17,650)= -1.19. The price of the microwaveable food product is elastic, meaning that the price of the product will affect the demand. As the price of the product increases, the demand for the frozen microwaveable food will decrease as well as if the price of the microwaveable food decreases, the demand for them will increase. Cross elasticity= 20(600/17,650) = .68. The cross elasticity, or the price of the leading competitive product, is positive, implying that they are substitute products. However, the elasticity is less than 1, which suggests that they are not necessarily good substitutes and the competitor’s price has little impact to the product sales. Per capita Income elasticity= 5.2(5,500/17,650) = 1.62. The product is income elastic. This would indicate that the product is a luxury product and will be responsive to income fluctuations. Advertising elasticity= .20(10,000/17,650) = .11. The product is inelastic with respect to advertising. An increase in advertising will have a very small effect on product sales. For instance, if we increased advertising by 10%, we would only see approximately a 1.2% increase in product sales. =-5200-42*(500) +20*(600) +5.2*(5500) +0.2*(11000) +0.25*(5000) = 17850 Number of Microwaves sold elasticity=......

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...-STRAYER. ~ UN I V ( R S ! T Y ECO 550 - Assignments and Rubrics Assignment 2: Operations Decision Worth 300 points. Due Date will be announced later. Assume you have been hired as a managing consultant by a company to offer some advice that will help it make a decision as to whether it should shut down completely or continue its operations. It currently uses 100 workers to produce 6,000 units of output per month (working 20 days / month). The daily wage (per worker) is $70, and the price of the firm's output is $32. The cost of other variable inputs is $2,000 per day. You are told that the firm's fixed cost is "high enough" so that the firm's total costs exceed its total revenue. The marginal cost of the last unit is $30. This assignment allows you to determine the specific details about this fictitious company in order to conduct an environmental scan of this company. Write a three to four (3-4) page paper in which you: 1. 2. Briefly describe the details of the fictitious business that you created for this assignment. Assess the current environmental scan factors that are relevant to the decision making process. Determine the factors that will have the greatest impact on plant operations and management's decision to continue or discontinue operations. Provide a rationale for your determination. Evaluate the financial performance of the company using the information provided in the scenario. Consider all the key drivers of performance, such as company profit or......

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...ECO550 Week 3 Assignment 1 ECO 550 Part 1: QD = - 5200 – 42P + 20C + 5.2(I) + 0.20(A) + 0.25(M) By converting the cent values into dollars and by putting the values of Price, competitions, income, Advertisement and number of oven, we shall have the following demand. So 500 cents= 5 Dollar 600 Cents= 6 Dollars QD=-5200-42(5)+20(6)+5.2(5500)+0.2(10,000)+0.25(5000) QD = -5200-210+120+28600+2000+1250 QD = 26,560 units Ep ( Price elasticity of demand) Own price elasticity of demand (ep) = ∂Q∂P×PQ ∂Q∂P = -42, P = 5, Q = 26,560 Own Price elasticity (ep) = - 42 × 526,560 x 100= - 0.79 (approx.) EX (Cross Price elasticity-in terms of competitors’ products) Cross price elasticity (exy) = ∂Q∂Px×PQ ∂Q∂Px = 20, Px = 6, Q = 26,560 Cross price elasticity (exy) = 6 × 2026,560 x 100= 0.45 (approx.) EI (Income elasticity) Income elasticity (eI) = ∂Q∂I×IQ ∂Q∂I = 5.2, I = 5500, Q = 26,560 Income elasticity (eI) = 5.2 × 550026,560 = 1.077 (approx.) EA ( Advertisement elasticity) Advertisement elasticity (eA) = ∂Q∂A×AQ ∂Q∂A = 0.2, A = 10,000, Q = 26,560 Advertisement elasticity (eA) = 0.2 × 10,00026,560 = 0.075 (approx.) EM Supply elasticity Supply elasticity (eM) = ∂Q∂A×MQ ∂Q∂A = 0.25, M = 5,000, Q = 26,560 Suppply elasticity (eA) = 0.25 × 5,00026,560 = 0.047 (approx.) Part 2: Price elasticity of demand Price elasticity is -0.79. There is negative relationship between price and demand. However, the ratio is less than 1, which means that an......

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...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. Use the following demand equation concerning the questions of this assignment. This equation has been estimated through linear regression. The independent variables are: price of the product discussed in this assignment (P), advertising expenditure (A), price of leading competitor’s product (C), per capita income (I) in the area, and number of microwave ovens sold in the area. The standard errors of estimation are in parentheses below the equation. QD = - 5200 – 42P + 20C + 5.2(I) + 0.20(A) + 0.25(M) (2) (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 for the independent variables: QD = Quantity demanded P (in cents) = Price of the product = 500 C (in cents) = Price of leading competitor’s product = 600 I (in dollars) = Monthly average income in the area = 5,500 A (in dollars) = Monthly advertising expenditures = 10,000 M = Number of microwave ovens sold in the area = 5,000 1. Compute the elasticities for each independent variable. Note: Write down all of your calculations. When P = 500, C = 600, I = 5500, A = 10000 and M = 5000, using regression equation, QD = -5200 - 42*500 + 20*600 + 5.2*5500 + 0.2*10000 + 0.25*5000 = 17650 Price......

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...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 the price falls, the amount demanded rises. Economists have considered this thoroughly and have developed a measure of the degree of cutback, which they call the “elasticity of demand.” The elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price.” “The greater the absolute value of this ratio, the greater is the elasticity of demand. When there is a close substitute for one firm’s brand, for example, a small percentage increase in that firm’s price may lead to a large percentage cut in the amount of the firm’s good demanded. In such a case, economists say that the demand for the good is highly elastic. On the other hand, when there are few good substitutes for a firm’s product, the firm might be able to raise its price substantially with only a small decrease in the quantity demanded resulting. In such a case, demand is said to be highly inelastic” (Henderson,. D 2008). Now let’s look at converting all price values into......

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...Demand Estimation Jasmine P ECO 550 Professor Sumadi May 3, 2015 Compute the elasticities for each independent variable. Note: Write down all of your calculations. QD = - 5200 - 42P + 20PX + 5.2I + .20A + .25M P = 500 PX = 600 I = 5500 A = 10,000 The quantity demanded is calculated as: Qd = -5200 – 42(500) + 20(600) + 5.2(5500) + 0.2(10000) +0.25(5000) = 17,650 Calculate Price Elasticity: Price Elasticity = (P/Q) * (Dq/Dp) = (500/17650) * (-42) = -1.19 Calculate other independent variables: Cross Price Elasticity, Epx = (600/17650) * (20) = 0.68 Income Elasticity, EI = (5500 / 17650)* (5.2) = 1.62 Advertisements Elasticity, EA = (10000 / 17650)* (0.20) = 0.11 Micro-oven Elasticity, EM = (5000 / 17650)* (0.25) = 0.07 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. Since the price elasticity is -1.19, this is considered a luxury good. The demand for this product is elastic indicating a 1% increase in the price. Long-term, hopefully this doesn’t stir customers away being that the price increased. Cross-price elasticity is 0.68, which means that any increase in price of the competitor’s widget will increase by 1% and the demand will increase by 0.68%. This is inelastic to the company since the competitor’s widget has no effect on the company’s sales in the long-term. Advertisement elasticity is 0.11...

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...mqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnm Demand Estimation ECO 550: Managerial Economics and Globalization 7/19/2015 Jason M Brown | 1. Compute the elasticity for each independent variable. When P=500 Px-600 I=$5,500 A=$10,000 and M=5,000, using the regression equation: QD = -5,200 -4,200(500)+5.2(600)+5.2(5,500)+0.20)(10,000)+0.25(5,000)=17,650 Price Elasticity = (P/Q) (∆Q/∆P) From the regression equation: ∆Q/∆P=-42 So price elasticity (EP) =(p/Q)(-42)(500/17650)=-1.19 Ec=20(600/17560)=0.68 EA=(P/Q) (0 .20) (10,000?17,650)=0.11 EI=(P/Q) (5.2) (5,500/17,650) = 1.62 EM=(P/Q) (0.25) (5,000/17,650) =0.07 2. Determine the implications for each of the computed elasticity for the business in terms of short term and long-term pricing strategies. Provide a rationale in which you cite your results. Price Elasticity is -1.19. That is a 1% increase in price of the product will make quantity demanded to drop by 1.19%. Thus, the demand for this product is somewhat elastic. Consequently, increase in income may drive consumers away. Cross-price elasticity is 0.68 that is if the price of the competitor’s product goes up by 1% then quantity demanded of this product will increase by 0.68%. This product is fairly inelastic to a competitor’s price and there exist no need to be concerned about the competitor since their pricing won’t affect sales. Income-elasticity is 1.62. This indicates that a 1% rise in the average area income will boost the quantity demanded by 1.62%...

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...ECO 550 Week 3 Assignment 1 – Demand Estimation Click Link Below To Buy: http://hwcampus.com/shop/eco-550/eco-550-week-3-assignment-1-demand-estimation/ Or Visit www.hwcampus.com ECO 550 Week 3 Assignment 1 – Demand Estimation 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 tutorial, located at http://www.sophia.org/tutorials/independentand- dependent-variables–3. Note: Your professor will provide you with the equation and data necessary for you to complete this assignment. You will find this information attached to Assignment 1 within the course shell. Write a four to six (4-6) page paper in which you: 1. Compute the elasticities for each independent variable. Note: Write down all of your calculations. 2. Determine the implications for each of the computed elasticities for the business in terms of shortterm and long-term pricing strategies. Provide a rationale in which you cite 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 recommendation. 4. Assume that all the factors affecting demand in this model remain the same, but that the......

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...ECO 550: Assignment 1: SUMMARZIED SOLUTION Q1) The demand equation is given as follows: QD = -5200 -42P +20Px +5.2 I +0.2 A + 0.25 M Now, we substitute the values provided in the question in the equation above, which yields QD = -5200 -42P +20Px +5.2 I +0.2 A + 0.25 M = -5200 -42($5) +20($6) +5.2($5,500) +0.2($10,000) +0.25(5000) = -5200 -210 +120 +28,600 +2000 +1250 QD = 26,560 The different elasticities are calculated as follows: (Own) Price Elasticity of Demand ((Ep ) = ∆Q x P ∆P Q = -(42) x ($5) [Substituting price for low-calorie frozen food is 500 cents or $5] 26560 [Substituting quantity demanded (Q) =26560] = -0.0079 [implying the demand for microwavable food is extremely inelastic] Cross Price Elasticity of Demand (EX) = ∆Q x P ∆P Q = +(20) x ($6) [Substituting price for productx-competitor’s food is 600 cents or $6] 26560 [Substituting quantity demanded (Q) =26560] = +0.0045 [implying the demand for......

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...ECO 550 Week 3 Assignment 1 – Demand Estimation Click Link Below To Buy: http://hwcampus.com/shop/eco-550/eco-550-week-3-assignment-1-demand-estimation/ Or Visit www.hwcampus.com ECO 550 Week 3 Assignment 1 – Demand Estimation 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 tutorial, located at http://www.sophia.org/tutorials/independentand- dependent-variables–3. Note: Your professor will provide you with the equation and data necessary for you to complete this assignment. You will find this information attached to Assignment 1 within the course shell. Write a four to six (4-6) page paper in which you: 1. Compute the elasticities for each independent variable. Note: Write down all of your calculations. 2. Determine the implications for each of the computed elasticities for the business in terms of shortterm and long-term pricing strategies. Provide a rationale in which you cite 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 recommendation. 4. Assume that all the factors affecting demand in this model remain the same, but that the......

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...ECO 550 Week 3 Assignment 1 – Demand Estimation Click Link Below To Buy: http://hwcampus.com/shop/eco-550/eco-550-week-3-assignment-1-demand-estimation/ Or Visit www.hwcampus.com ECO 550 Week 3 Assignment 1 – Demand Estimation 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 tutorial, located at http://www.sophia.org/tutorials/independentand- dependent-variables–3. Note: Your professor will provide you with the equation and data necessary for you to complete this assignment. You will find this information attached to Assignment 1 within the course shell. Write a four to six (4-6) page paper in which you: 1. Compute the elasticities for each independent variable. Note: Write down all of your calculations. 2. Determine the implications for each of the computed elasticities for the business in terms of shortterm and long-term pricing strategies. Provide a rationale in which you cite 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 recommendation. 4. Assume that all the factors affecting demand in this model remain the same, but that the......

Words: 380 - Pages: 2

Words: 380 - Pages: 2