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Problem:

Suppose that you work for maker of a leading brand of low-calorie microwavable food which estimates the following demand equation for its product using data from 26 supermarkets around the country for month of April.

For a refresher on dependent and independent variables, please go to Sophia’s Website and check the Independent and Dependent Variables tutorial, located at:

http://www.sophia.org/tutorials/independent-and-dependent-variables--3.

prepare down four to six (4-6) page paper in which you:

1. find out the elasticity’s for each independent variable. Note: prepare all of your computations.

2. Find out the implications for each of the evaluated elasticity’s for business in terms of short-term and long-term pricing strategies. Give a rationale in which you cite your results.

3. Suggest whether you believe that this firm should or shouldn’t cut its price to raise its market share. Give support for your suggestion

4. Suppose that all the factors affecting demand in this model remain the same, however that the price has changed. Further suppose that the price changes are 100, 200, 300, 400, 500, 600 dollars.

a. Plot the demand curve for firm.

b. Plot the corresponding supply curve on same graph by using the supply function Q = 5200 + 45P with the same prices.

c. Find out the equilibrium price and quantity.

d. Highlight the important factors which could cause changes in supply and demand for product. Find out the primary manner in which both the short-term and long-term changes in market situations could impact the demand for, and supply, of product.

e. Point to the crucial factors which could cause rightward shifts and leftward shifts of demand and supply curves.

f. Employ at least three quality academic resources in this assignment.

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M914046

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