Assignment 1: Demand Estimation

Assignment 1: Demand Estimation Due Week 3 and worth 200 pointsImagine that you work for the maker of a leading brand of low-calorie, frozen microwavable food thatestimates the following demand equation for its product using data from 26 supermarkets around thecountry for the month of April.For a refresher on independent and dependent variables, please go to Sophia’s Website and review theIndependent and Dependent Variables tutorial, located at http://www.sophia.org/tutorials/independentand-dependent-variables–3.Note: Your professor will provide you with the equation and data necessary for you to complete thisassignment. You will find this information attached to Assignment 1 within the course shell.Write a four to six (4-6) page paper in which you:1. Compute the elasticities for each independent variable. Note: Write down all of your calculations.2. Determine the implications for each of the computed elasticities for the business in terms of shorttermand long-term pricing strategies. Provide a rationale in which you cite your results.3. Recommend whether you believe that this firm should or should not cut its price to increase itsmarket share. Provide support for your recommendation.4. Assume that all the factors affecting demand in this model remain the same, but that the pricehas changed. Further assume that the price changes are 100, 200, 300, 400, 500, 600 dollars.a) Plot the demand curve for the firm.b) Plot the corresponding supply curve on the same graph using the following MC / supplyfunction Q = -7909.89 + 79.0989P with the same prices.c) Determine the equilibrium price and quantity.d) Outline the significant factors that could cause changes in supply and demand for theproduct. Determine the primary manner in which both the short-term and the long-termchanges in market conditions could impact the demand for, and the supply, of theproduct.5. Indicate the crucial factors that could cause rightward shifts and leftward shifts of the demand andsupply curves.6. Use at least three (3) quality academic resources in this assignment. Note: Wikipedia does notqualify as an academic resource.Your assignment must follow these formatting requirements:• Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on allsides; citations and references must follow APA or school-specific format. Check with yourprofessor for any additional instructions.• Include a cover page containing the title of the assignment, the student’s name, the professor’sname, the course title, and the date. The cover page and the reference page are not included inthe required assignment page length.The specific course learning outcomes associated with this assignment are:• Analyze how production and cost functions in the short run and long run affect the strategy ofindividual firms. • Apply the concepts of supply and demand to determine the impact of changes in market conditions in the short run and long run, and the economic impact on a company’s operations.• Use technology and information resources to research issues in managerial economics andglobalization.• Write clearly and concisely about managerial economics and globalization using proper writingmechanics.