Price Elasticity Of Demand Measured Essay

Price Elasticity Of Demand Measured Essay

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McGuigan, Moyer & Harris (2014) price elasticity of demand measured by the changes that affect at least one-factor price, advertising, promotion, packaging or income levels (p.64). However, my supervisor needs the elasticities for each independent variable using the regression equation above and adding values, P= 500, PX= 600, I= $5,500, A= $10,000, M=5,000. Adding the P, PX, I, A, and M value to the regression table: QD= - 5,200 – 42(500) + 20(600) + 5.2(5,500) + 0.20(10,000) + 0.25(5,000) = 17,650. McGuigan, Moyer & Harris (2014) describes the price elasticity of demand ratio of the percentage change in quantity demanded to the percentage change in price if all other factors of demand continue to be untouched (p.72).
Price of Product Elasticity: Ep=(P/Q) (-42)
Ep= (-42) (500/17650)
Ep= (-42) *0.0283= -1.189 or -1.19
Cross Elasticity: Epx =20*(600/17,650)
Epx= 20*(0.0339)
Epx=0.68
Income Elasticity: Ei= 5.2(5500/17,650)
Ei= 5.2(3.116)
Ei= 1.62
Advertisement Elasticity: Ea= 0.20(10000/17,650)
Ea= 0.20(0.566)
Ea= 0.1133
Supply Marketing Elasticity: Em= 0.25(5000/17650)
Em= 0.25(0.283)
Em=0.07
The price elasticity of demand is -1.19 it is called inelastic (McGuigan, Moyer & Harris, 2014). This means when demand elasticity is less than one in absolute value, an increase in price but result in a decrease in (P*QD). However, the customer total expenditure is directly related to the price. If the company strategy is to increase the price will affect the total revenue for the company. This will not be the best thing short term or long term.
2. Determine the implications for each of the computed elasticities for the business in terms of short-term and long-term pricing strategies. Provide a rationale in which you cite your results.

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...t could cause rightward shifts and leftward shifts of the demand and supply curves for the low-calorie, frozen microwavable food.
A major factor that will influence the demand and supply of the good microwaveable product is the price and product. A change in supply by a shift to the right or left. A decrease in consumer income or the current recession can cause a left shift of the demand curve. If customers typically buy the product at a certain price and see an increase in the price. The consumers will purchase alternative products in a cheaper way. Shifts in the supply curve caused by changes in the price of the commodity. Variations in the demand curve could be due to the change in consumer taste preferences, prices of competitors, or income. The price of the product alters the request in commodity by shifting to the right or the left of the original demand curve.

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