Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1.One of the leading refrigerator producers has estimated the following demand equation after analyzing 36 regional markets: Q =+ 25,000 - 45 P + 20

1.One of the leading refrigerator producers has estimated the following demand equation after analyzing 36 regional markets:

Q =+ 25,000 - 45P + 20A + 25 - 30 + 110 I

(12000)(20.2)(14)(9)(48)(50)

R2= 0.86F = 28.52

The variables and their assumed values are

Q = Quantity

P = Price of the basic Model = 1200 (dollars)

A = Advertising Expenditures = 90 (thousand dollars)

= Average price of the competitor's product = 1400 (dollars)

= competitor's advertising expenditures = 80 (thousand dollars)

I = per capita income = 60 (thousand dollars)

a.Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm's marketing, pricing, and production policies?

b.What would be the effect of a 6 unit increase in the competitor's advertising expenditures?

c.What would be the change in your advertising expenditures to offset your competitor's strategy?

d.Conduct a t-test for the statistical significance of each variable. Discuss the results of the t-tests in light of the policy implications mentioned.

e.What proportion of the variation in sales is explained by the independent variables in the equation? How confident are you about this answer?Explain conducting an F-test.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managers And The Legal Environment

Authors: E. Bagley

9th Edition

1337555177, 978-1337555173

More Books

Students also viewed these Economics questions

Question

What other requirements do they have for admission?

Answered: 1 week ago

Question

Excel caculation on cascade mental health clinic

Answered: 1 week ago