Imagine that you work for the maker of a leading brand of low-calorie microwavab

Question

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 Sophias Website and review the Independent and Dependent Variables tutorial, located at http://www.sophia.org/tutorials/independent-and-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:

Note: The following is a regression equation. Standard errors are in parentheses for the demand for widgets.
QD       =          - 5200 - 42P + 20PX + 5.2I + .20A + .25M
(2.002)  (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:

Q           =          Quantity demanded
P (in cents)       =          Price of the product = 500
PX (in cents)     =          Price of leading competitor

Explanation / Answer

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