Essay on Demand Of Demand And Supply

Essay on Demand Of Demand And Supply

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Demand and Supply
In the economic world, have you ever thought of how demand estimation can be calculated and interpreted as it relates to a regression equation? Well, let me start by defining what demand estimation mean. Demand estimation is a process that involves coming up with an estimate of the amount of demand for a product or service within a particular period of time (Arthur, 2016). For the month of April, having the privilege to work for a maker of a leading brand of low-calorie, frozen microwavable food; while collecting the data from 26 supermarkets around the country has been an interesting experience. The data consist of a regression equation that includes:
QD = -3,750 - 100P + 25A + 50PX + 8Y
(5,234) (2.29) (525) (1.75) (1.5)
R2 = 0.90 n = 26 F = 35.25
P (in cents) = 300 cents per unit (price per unit)
PX (in cents) = 200 cents per unit (price of leading competitor’s product)
Y (in dollars) = $10,000 (per capita income in the Standard Metropolitan Statistical Area)
A (in dollars) = $750 (monthly advertising expenditures)
Therefore, the elasticities for each independent variable will need to be computed as follow because this will provide the breakdown of how each variable will represent within the equation. The dependent variable shows that the quantity demanded will equal to 75,000.
QD = -3,750-100P+25A+50PX+8Y
QD = -3,750-100(300) +25(750) +50(200) +8(10,000)
QD = -3,750-30,000+18,750+10,000+80,000
QD = 75,000
Since the own price elasticity is less than one, the effect in the price will change for the short-term and long-term pricing strategies. Also, this will implicate the demand for the price and give a negative output of -0.4, in which this will cause the coefficient of ( P) for the microwav...


... middle of paper ...


...-3,750/5234= -0.72, -100/2.29= -43.67, 25/525= 0.048, 50/1.75= 28.57, 8/1.5= 5.33
Price QD Qs
100 95000 0
200 85000 7909.89
300 75000 15819.78
400 65000 23729.67
500 55000 31639.56
600 45000 39549.45
700 35000 47459.34
800 25000 55369.23


In conclusion, the changes in the market area of the overall investment could affect the short-term and long-term for both the shifting demand and supply curves for this low-calorie product. Some of those factors could include the price of the product, income of consumers, and the microwaveable food. The supply and demand model explains the manner in which suppliers and consumers interact to establish the quantity and the price of a good or a service in the market (Perloff, 2013). To understand demand and supply of a good or service, buyers and sellers’ behavior and how their actions affect price and quantity must be established.

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