Posted: November 1st, 2024

Demand Estimation essay

Question description

Week 3 Assignment 1 Submission_Rub.docx8525799.xlsxI need someone to edit my ECO paper. I will attach the rubric and my paper. The paper is wrote in entirely. Still need a conclusion. I need someone to fix my mistakes and help make it sound a lot better. I still need 3 more references. The rubric is attached.
Introduction
In this paper I will
compute the elasticities for each independent that was given to me. I will determine the implications for each of
the computed elasticities. Elasticity, as it is used in economics, refers to
the response of a "dependent" variable to changes in the
"independent" variable (n.a., 2014).
I will recommend whether the firm should or should not cut its price to
increase market share. I will then plot the demand curve and the supply curve.
I will determine the equilibrium price and quantity. I will also outline the
significant factors that could cause a change in the supply and demand. I will
then indicate the crucial factors that cause the rightward shifts and leftward
shifts in demand.
Elasticities
In Computing the elasticities you
will need to put calculate the following numbers_QD=
-5200-42P+20PX+5.21+.20A+.25M
We
will need to convert the figure prices in to the dollars. After doing that we
will put the values into the equation and we will get the following below:
QD=-5200-(42x5)
+ (20x6) + (5.2x5500) + (0.20X1000) + (0.25X5000) = 26560
Next I will calculate the own price
elasticity =-4.2,
P=5, Q=26560
-42
X 5/26560=-0.008 (rounded number)
Next I will calculate the cross
elasticity20,
PX=6, Q=26560
20
X 6/26560=0.005 (rounded number)
Next I will calculate the Income
elasticity5.2, I = 5500, Q=26560=5.2 x 5500/26560 = 1.08 (rounded number)Next
I will calculate Advertisement elasticity0.2, A = 10000, Q=26560=0.2 x 1000/26560 =0.08 (rounded number)Next
I will calculate the oven elasticity0.25, M = 5000, Q=26560=0.25 x 5000/26560 =0.05 (rounded number)Implications
  After reviewing the
results that I provided above you will notice several different things. First
you will notice that the own price elasticity is rounded to -0.008. That shows
that the demand for the microwavable low –calorie foods is sensitive to the change.
With that being said is the increase in the food price will lead to the
quantity falling causing the demand to be less than the required amount.  I found that the income elasticity that was
calculated was rounded off to 1.08. That implies that the goods are a
necessity.
  After reviewing the cross
price the number came to 0.005. That implies that the numbers can be a neutral
item.  While looking at the advertisement
elasticity I found that to come out to 0.08. This shows that the advertisement
plays a big part in the sale of the items. Finally I looked at the microwave
elasticity. The number came to 0.05. This implies that oven sales increased and
the demand for the microwavable foods also increased.
Recommendation
  I
found that if the price falls the total revenue will too since the price
elasticity that was calculated is less than 1. With the cross price elasticity
of the foods being so close to zero, I don’t see the company making their
prices any lower to increase its market share.
Demand
Curve

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Supply
Curve

Equilibrium
Price and Quantity
  After computing the
numbers we will have for the equilibrium, market demand will equal the market
supply.
P=248
Q =16357
Influential Factors
  There
are several factors that can influence the demand and supply. I found that the
income, advertisement, and the competitor’s price will drastically affect the
demand. While the supply, the need for more advancement technology can
drastically affect the supply.
Crucial Factors
  When
you find that individual’s income increase some the demand of the product will
curve rightward. Then when it comes to the individual income decreasing some
the curve will shift leftward. When the advertisement increases in price then
will the shift in demand curve rightward and leftward. With the improvement of technology
the supply curve will shift rightward.

References
n.a. (2014, April 23). Retrieved from Itech:
http://itech.fgcu.edu/faculty/bhobbs/elasticity.html

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