2.1. What is the meaning of the parameters -22P, 12PC and 3.2Y?
Queion 2 [40] Vims Solutions (Pty) Ltd is the manufacturer of various antivirus vaccines and chnonic medicines. Some of the patents under which their medicines had been produced expired alter the prescribed time limit. Now they are faced with generic competition in the global market. The marketing and sales departments of Virus Solutions employed you as a consultant to determine for the company what they can expect will hmpen to the sales ot a certain anti- cholesterol drug called Cholestolvin once the patent right expi'es and a gateric corrtpetitor also enters the market. The competitor has already uneducted various sample tests and marketing campaigns and has veryr good data on what they think their prices will be. Virus Solutions also intends to launch a big advertisement and marketing campaign aimed at doctors. hospitals and clinics to boost sales. The company sells this product through more than 150 'I'tdependent chemists cinics and private hospitals. Virus Solutions' marketing research team developed the demand equation below for expected daily sales of Cholestotvin. based on its average retail sales over the last 18 months. data of its competitors and income data of its clients. Q = 8 600 22F + 12H; + 3.2Y + 0.4a + 0.028 (6.2) t?) {'9'} [0.21) [0.08) {Standard deviatim) R2=0.76 n=150 F=3.38 s B S PegaotAseiger-errt SLIM-IRENE ASSESSMENT - 2020 FIRST SEMESTER E60600 MANAGERIAL EGONOI-ICS The following are the independent variables and their current values: a Q = quantity sold per month (sales) a P {in rand) = Price of monthly packet of Cholestolvin = R1 020 0 P: (in rand] = Price at leading and only competitors product Anticholee = R1 050 - Y {in rand) = Average per capita income in the country = R25 000 a A {in rand} = Virus Solutions' monthly advertising expenditure = R20 000 a S {in units] = Total number of packets oi anti-cttotesterol tablets sold across the country per day =100 ODD . F {critical val ue} = 3.38 at 5% level at significance 0 To = 3.33 - TY = 2.9 Blasted: Note: Show all calculations and relevant formulas. 2.1. What is the meaning oi the parameters -22P. 12Pc and 3.2Y? (3} 2.2. Calculate the total quantity of Cholestolvin that Virus Solutions can expect to salt per day. {3} 2.3. What portion (96] or the total daily market can Virus Solutions expect to take up? And what type of market is the cholesterol medicine? (2} 2.4. Calculate the elasticities tor the price of Cholestolvin (P). the product at the leading competitor Anticholes (Po). average income (Y) and advertising expenditure (A). {5} 2.5. What will happen to the revenue at the company it Virus Solutions decides to increase its price, given that all other factors mill stay the same. (Hint: Use the price elasticity value.) What kind of product is Choleetohrin'? {2} 2.6. Calculate the standard deviation vetoes for the competitor's product Anticholes and income (Y). {4} 2.7. How significant are the independent variables in total and individually to explain the total quantity at sales that Virus Solutions can expect? (12} 2.8. Assume that the following changes take place in the market for anti-cholesterol medicine: The price (P) of Cholestolvin drops to R950. the price at the competitor's product Anticholes increases to Rt 150 and the average per capita income of the country increases to R28 000. 2.8.1. Calculate the new quantity ot Cholesth that Vints Solutions can expect to sell. {3) 2.8.2. Calculate the arch elasticity ot demand. moss-price elasticiy of demand and income elasticity of demand for Cholestohrin. (B)
