Demand Estimation Paper and Excel Assignment Essay
If the demand is elastic, then one should cut the price and increase the total revenue. Lower prices increase sells. The cross price elasticity (PIX) is the price of the leading competitors product as positive. Its numerical value is 0. 679887. Because they are positive, they become substitutes. 1623513 means that the income elasticity is positive, so the product is normal. This shows that if the income goes up, then people will buy more. 0. 113314 is the advertising elasticity. The value is positive. Since it is positive, if one advertises then one is subject to more sells with the more that they have of it.
For (M) the price elasticity of demand is 0. 070822. Because this number is positive, one will have an increase in total revenue. Should this firm cut its price to increase its market share? Consumer decisions are based on price elasticity. One should suggest that the firm not cut its price to increase its market share. It’s clear that the market share is up already.
The demand is high and the price is not affected, so one should continue at the same price to maximize their total sales. One should move to assume that all the factors affecting demand in this model remain the same, but hat the price has changed.
One should further assume that the price changes are 100, 200, 300, 400, 500, and 600 dollars. When completing the calculations in Excel, first one should solve for quantity demand. Next, one should solve for supply. The equation used for this is -7909. 89 + 79. IPPP. The letter (P) is being replaced with the numerical values previously listed as the price changes (1 00, 200, 300, 400, 500, 600). Afterwards, one will make SQ Sq and solve for (P). -7909. 89 + 79. IPPP = O, 79. IPPP = 7909. 89, 79. 0989 is divided by both sides which equals p = 79. 0989/7909. 89 = 100. (P) = 100.
The (P) is replaced where 100 is. This will make both sides equal to one another. If a change takes place with demand and supply, it could cause the graph to move to the left or to the right. The price does not change although the graph will change. Indicate the crucial factors that could cause rightwards shifts and leftward shifts of the demand and supply curve? If there is a shift in the demand curve it will either go to the left or right. The price will remain the same.