- The forecasting staff for the Prizer Corporation has developed a model to predict sales of its air-cushioned-ride snowmobiles. The model specifies that sales S vary jointly with disposable personal income Y and the population between age 15 and 40, , and inversely with the price of the snowmobiles P. Based on past data, the best estimate of this relationship is
. A firm experienced the demand shown in the following table.
- Fill in the table by preparing forecasts based on a five year moving average, a three moving average and exponential smoothing (with a w=0.9 and a w=0.3). Note: The exponential smoothing forecasts may be begun by assuming Yt+1 = Yt.
. The economic analysis division of Mapco Enterprises has estimated the demand function for its line of weed trimmers as
QD=18,000 + 0.4N - 350PM + 90PS
Where N = number of new homes completed in the primary market area
PM = price of the Mapco trimmer
PS = price of its competitor's Surefire trimmer
In 2010, 15, 000 new homes are expected to be completed in the primary market area. Mapco plans to charge $50 for its trimmer. The Surefire trimmer is expected to sell for $55
. Savings-Mart (a chain of discount department stores) sells patio and lawn furniture. Sales are seasonal, with higher sales during the spring and summer quarters and lower sales during the fall and winter quarters. The company developed the following quarterly sales forecasting model.
- If the US dollar were to appreciate substantially, what steps could a domestic manufacture like Cummins Engine Co. of Columbus, Indiana, take in advance to reduce the effect of the exchange rate fluctuation on company profitability?
7. If Boeing's dollar aircraft prices increase 20 percent and the yen/dollar exchange declines 15 percent, what effective price increase is facing Japan Air Lines for the purchase of a Boeing 747? Would Boeing's margin likely rise or fall if the yen then depreciated and competitor prices were unchanged?
9. If unit labor costs in Spain and Portugal rise, but unit labor costs in Germany decline and other producer prices remain unchanged, what effect should these factors by themselves, have on export trade and why?
10. What three factors determine whether two economies with separate fiscal and monetary authorities should form a currency union? Give an illustration of each factor using NAFTA economies.