...ECO 550: Assignment 1: SUMMARZIED SOLUTION Q1) The demand equation is given as follows: QD = -5200 -42P +20Px +5.2 I +0.2 A + 0.25 M Now, we substitute the values provided in the question in the equation above, which yields QD = -5200 -42P +20Px +5.2 I +0.2 A + 0.25 M = -5200 -42($5) +20($6) +5.2($5,500) +0.2($10,000) +0.25(5000) = -5200 -210 +120 +28,600 +2000 +1250 QD = 26,560 The different elasticities are calculated as follows: (Own) Price Elasticity of Demand ((Ep ) = ∆Q x P ∆P Q = -(42) x ($5) [Substituting price for low-calorie frozen food is 500 cents or $5] 26560 [Substituting quantity demanded (Q) =26560] = -0.0079 [implying the demand for microwavable food is extremely inelastic] Cross Price Elasticity of Demand (EX) = ∆Q x P ∆P Q = +(20) x ($6) [Substituting price for productx-competitor’s food is 600 cents or $6] 26560 [Substituting quantity demanded (Q) =26560] = +0.0045 [implying the demand for competitor’s...
Words: 1287 - Pages: 6
...Demand Estimation Jasmine P ECO 550 Professor Sumadi May 3, 2015 Compute the elasticities for each independent variable. Note: Write down all of your calculations. QD = - 5200 - 42P + 20PX + 5.2I + .20A + .25M P = 500 PX = 600 I = 5500 A = 10,000 The quantity demanded is calculated as: Qd = -5200 – 42(500) + 20(600) + 5.2(5500) + 0.2(10000) +0.25(5000) = 17,650 Calculate Price Elasticity: Price Elasticity = (P/Q) * (Dq/Dp) = (500/17650) * (-42) = -1.19 Calculate other independent variables: Cross Price Elasticity, Epx = (600/17650) * (20) = 0.68 Income Elasticity, EI = (5500 / 17650)* (5.2) = 1.62 Advertisements Elasticity, EA = (10000 / 17650)* (0.20) = 0.11 Micro-oven Elasticity, EM = (5000 / 17650)* (0.25) = 0.07 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. Since the price elasticity is -1.19, this is considered a luxury good. The demand for this product is elastic indicating a 1% increase in the price. Long-term, hopefully this doesn’t stir customers away being that the price increased. Cross-price elasticity is 0.68, which means that any increase in price of the competitor’s widget will increase by 1% and the demand will increase by 0.68%. This is inelastic to the company since the competitor’s widget has no effect on the company’s sales in the long-term. Advertisement elasticity is 0.11...
Words: 919 - Pages: 4
...nment Assignment 1 “Making Decisions Based on Demand and Forecasting” Strayer University ECO 5550 – Managerial Economics and Globalization May 12, 2013 Making Decisions Based on Demand and Forecasting There are several demographic and independent variables which are relevant in completing a demand analysis for pizza in Loudoun County, Virginia. The first variable that I used in completing my demand analysis is the average cost per pizza in the Loudoun County, Virginia area. The average cost of pizza is imperative in completing a demand analysis, because consumers in Loudoun County, Virginia have several choices in pizza companies vying for their attention. The second variable that I used was the sales revenue for Domino’s Pizza domestic stores for the quarters ranging from the first quarter of 2010 to the first quarter of 2013. Once I obtained the sales figures for the quarters ranging from the first quarter of 2010 to the first quarter of 2013, I then divided the sales revenue in order to obtain the average sales revenue for each domestic store. In order to complete a demand analysis, and forecasting income for future periods one must be able to know the relationship between the average sales per store, and the consumers who are demanding the product. The third variable that I used in completing my demand analysis is median income for Loudoun County, Virginia. Median income is significant for two reasons; first one can tell if the median income can afford to...
Words: 1027 - Pages: 5
...Making Decisions Based on Demand and Forecasting Sylvia Evans Dr. Elkanah Faux ECO 550 January 27, 2013 Strayer University In this assignment I will be discussing the t that Domino’s is considering entering the marketplace in my community of Waynesboro, GA. I have conducted research to gather information in regards to demand for this business based on population, average income per household and average cost of pizza in this particular area. The end results of this research and demand analysis we should be able to determine if this would be a wise investment move to make on Domino’s behalf. Waynesboro is a fairly small town located in Burke County, GA. The current population for this town is about 5,781(www.city-data.com). The median income per household in my city from 2001 to 2011 has ranged from an estimate of about $27,166 to about $31,188 for the current day. The average cost of pizza from other pizza places over the years (2001-2011) ranged anywhere from $5.00 to about $18.00 depending on what you want and how you want it prepared. As far as household sizes they would range from about 1 person to about 5 people on average and the number of pizzas were hypothetically ordered were based on the number of people per household and how much income they were making. The more kids that are in a household the better the chances are of ordering pizza since it is no secret that kids love pizza. Another factor to consider would be single individuals who work long hours and...
Words: 1241 - Pages: 5
...Demand Estimation | [Type the document subtitle] | | Professor: Dr. Camille Castorina | | ECO 550: Managerial Economics and Globalization | 7/21/2014 | | In this assignment we will look at a certain scenario that involves estimating the demand of a product when certain variables are put into place. So first thing is understanding what is demand and how does it apply in Economics. “The law of demand states that when the price of a good rises, the amount demanded falls, and when the price falls, the amount demanded rises. Economists have considered this thoroughly and have developed a measure of the degree of cutback, which they call the “elasticity of demand.” The elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price.” “The greater the absolute value of this ratio, the greater is the elasticity of demand. When there is a close substitute for one firm’s brand, for example, a small percentage increase in that firm’s price may lead to a large percentage cut in the amount of the firm’s good demanded. In such a case, economists say that the demand for the good is highly elastic. On the other hand, when there are few good substitutes for a firm’s product, the firm might be able to raise its price substantially with only a small decrease in the quantity demanded resulting. In such a case, demand is said to be highly inelastic” (Henderson,. D 2008). Now let’s look at converting all price values into dollars...
Words: 876 - Pages: 4
...ECO550 Week 3 Assignment 1 ECO 550 Part 1: QD = - 5200 – 42P + 20C + 5.2(I) + 0.20(A) + 0.25(M) By converting the cent values into dollars and by putting the values of Price, competitions, income, Advertisement and number of oven, we shall have the following demand. So 500 cents= 5 Dollar 600 Cents= 6 Dollars QD=-5200-42(5)+20(6)+5.2(5500)+0.2(10,000)+0.25(5000) QD = -5200-210+120+28600+2000+1250 QD = 26,560 units Ep ( Price elasticity of demand) Own price elasticity of demand (ep) = ∂Q∂P×PQ ∂Q∂P = -42, P = 5, Q = 26,560 Own Price elasticity (ep) = - 42 × 526,560 x 100= - 0.79 (approx.) EX (Cross Price elasticity-in terms of competitors’ products) Cross price elasticity (exy) = ∂Q∂Px×PQ ∂Q∂Px = 20, Px = 6, Q = 26,560 Cross price elasticity (exy) = 6 × 2026,560 x 100= 0.45 (approx.) EI (Income elasticity) Income elasticity (eI) = ∂Q∂I×IQ ∂Q∂I = 5.2, I = 5500, Q = 26,560 Income elasticity (eI) = 5.2 × 550026,560 = 1.077 (approx.) EA ( Advertisement elasticity) Advertisement elasticity (eA) = ∂Q∂A×AQ ∂Q∂A = 0.2, A = 10,000, Q = 26,560 Advertisement elasticity (eA) = 0.2 × 10,00026,560 = 0.075 (approx.) EM Supply elasticity Supply elasticity (eM) = ∂Q∂A×MQ ∂Q∂A = 0.25, M = 5,000, Q = 26,560 Suppply elasticity (eA) = 0.25 × 5,00026,560 = 0.047 (approx.) Part 2: Price elasticity of demand Price elasticity is -0.79. There is negative relationship between price and demand. However, the ratio is less than 1, which means that an increase...
Words: 1472 - Pages: 6
...ECO 550 Entire Course Managerial Economics and Globalization Follow Below Link to Download Tutorial https://homeworklance.com/downloads/eco-550-entire-course-managerial-economics-globalization/ For More Information Visit Our Website ( https://homeworklance.com/ ) Email us At: Support@homeworklance.com or lancehomework@gmail.com ECO 550 DQ 1: Managerial Economic Decision Making From the e-Activity, assess how business leaders use managerial economics to make business decisions indicating how profits may be impacted. Analyze the principal-agent problem to determine how the relationship could be less adversarial. ECO 550 DQ 2: Fundamental Economic Concepts Pick a recently released good or service. Then, determine the factors that must be evaluated regarding the product’s supply and demand. Analyze how these factors impact the decision to supply the product indicating the significance of each in the decision-making process. ECO 550 DQ 3 From the e-Activity, explain the most important information you would require on which to base sound economic judgments. Explain your rationale. Assess the various forms of organizing and processing information to determine which is the most difficult to get correct. Explain your rationale ECO 550 DQ 4 Analyze the characteristics that make any transaction possible and justify the importance of each of the characteristics.Evaluate the role institutions play in transactions and discuss the likely economic impact...
Words: 1790 - Pages: 8
...ECO 550 Complete Class Click Link Below To Buy: http://hwcampus.com/shop/eco-550/eco-550-complete-class/ Or Visit www.hwcampus.com ECO 550 Complete Class ECO 550 Week 3 Assignment 1 – Demand Estimation Imagine that you work for the maker of a leading brand of low-calorie microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April. For a refresher on independent and dependent variables, please go to Sophia’s Website and review the Independent 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 this assignment. 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 shortterm and 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 its market share. Provide support for your recommendation. 4. Assume that all the factors affecting demand in this model remain the same, but that the price has changed. Further...
Words: 3181 - Pages: 13
...ECO 550 Complete Class Click Link Below To Buy: http://hwcampus.com/shop/eco-550/eco-550-complete-class/ Or Visit www.hwcampus.com ECO 550 Complete Class ECO 550 Week 3 Assignment 1 – Demand Estimation Imagine that you work for the maker of a leading brand of low-calorie microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April. For a refresher on independent and dependent variables, please go to Sophia’s Website and review the Independent 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 this assignment. 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 shortterm and 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 its market share. Provide support for your recommendation. 4. Assume that all the factors affecting demand in this model remain the same, but that the price has changed. Further...
Words: 3181 - Pages: 13
...ECO 550 Complete Class Click Link Below To Buy: http://hwcampus.com/shop/eco-550/eco-550-complete-class/ Or Visit www.hwcampus.com ECO 550 Complete Class ECO 550 Week 3 Assignment 1 – Demand Estimation Imagine that you work for the maker of a leading brand of low-calorie microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April. For a refresher on independent and dependent variables, please go to Sophia’s Website and review the Independent 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 this assignment. 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 shortterm and 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 its market share. Provide support for your recommendation. 4. Assume that all the factors affecting demand in this model remain the same, but that the price has changed. Further...
Words: 3181 - Pages: 13
...ECO 550 Complete Class Click Link Below To Buy: http://hwcampus.com/shop/eco-550/eco-550-complete-class/ Or Visit www.hwcampus.com ECO 550 Complete Class ECO 550 Week 3 Assignment 1 – Demand Estimation Imagine that you work for the maker of a leading brand of low-calorie microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April. For a refresher on independent and dependent variables, please go to Sophia’s Website and review the Independent 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 this assignment. 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 shortterm and 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 its market share. Provide support for your recommendation. 4. Assume that all the factors affecting demand in this model remain the same, but that the price has changed. Further...
Words: 3181 - Pages: 13
...ECO 550 Complete Class Click Link Below To Buy: http://hwcampus.com/shop/eco-550/eco-550-complete-class/ Or Visit www.hwcampus.com ECO 550 Complete Class ECO 550 Week 3 Assignment 1 – Demand Estimation Imagine that you work for the maker of a leading brand of low-calorie microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April. For a refresher on independent and dependent variables, please go to Sophia’s Website and review the Independent 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 this assignment. 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 shortterm and 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 its market share. Provide support for your recommendation. 4. Assume that all the factors affecting demand in this model remain the same, but that the price has changed. Further...
Words: 3181 - Pages: 13
...TermPaperWarehouse.com - Free Term Papers, Essays and Research Documents The Research Paper Factory Join Search Browse Saved Papers Search Home Page » Business and Management Assignment 2 Eco 550 In: Business and Management Assignment 2 Eco 550 Operations Decisions Assignment # 2 August 7, 2013 1. Briefly describe the details of the fictitious business that you created for this assignment. There will be 100 employees who work 20 days each month with a salary of $70 each day. The employees will manufacture 6,000 units of output each month which has a variable costs of $2,000 per day. The fixed costs have not been revealed and we are advised they are "high enough" which the total costs will exceed the corporation’s total revenue. The price of the corporation’s output is $32 and the marginal cost of the last unit is $30. 2. Access the current environmental scan factors. Determine the factors that will have the greatest impact on plant operations and management's decision to continue or discontinue operations. With the information given the main elements of an environmental scan are; the expected time the business anticipates to be in the marketplace (short run vs. long run), the elasticity of demand for the item the corporation manufactures, competition (many firms vs. few firms), and fabrication expenses. Some other trivial elements of an environmental scan reveal the learning curve of employees against experience, turnover, and markets. Time frame is one of...
Words: 363 - Pages: 2
...ECO 550 Assignment #3 Game Theory and Monopolies by ECO 550 Assignment #3 1. Some games of strategy are cooperative. One example is deciding which side of the road to drive on. It doesn’t matter which side it is as long as everyone chooses the same side. Otherwise, everyone may get hurt. Driver 2 Left Right Driver 1 Left 0,0 -1000 -1000 Right -1000, -1000 0,0 a. Does either player have a dominant strategy? No. A Dominant Strategy is “a strategy that results in the best outcome or highest payoff to a given player no matter what action or choice the other player makes” (Farnham, 2010, p. 233). In a situation such as this, there has to be cooperation, or the consequences could be deadly. b. Is there Nash equilibrium in this game? Yes, if both drivers chose either left or right, there would be equilibrium, since they are “choosing their best strategy, given the actions of the other players,” (p. 234). c. Why this game is called a cooperative game? Given the consequences of life and death, cooperation is needed by both drivers to achieve the optimal outcome. Both drivers must choose either Left or Right, so communication and cooperation are needed. 2. Using the chart, Figure 1. below, answer the following questions. a. What is the firm’s Total Revenue? This...
Words: 505 - Pages: 3
...R2 = 0.55 n= 26 4.88 Values of the independent variables: Q = Quantity demanded for 3-pack units P (in cents)= Price of the product = $5.00 per 3-pack unit PX (in cents)= Price of leading competitor’s product = $6.00 per 3-pack unit I (in dollars)= Per capita income = $5,500 QD = -1000 – 420(5.00) + 20(6.00) + 2($5,500) = QD = -1000 – 2100 + 120 +11000 = QD = 8020 KEITH BYCHOLSKI: US? KEITH BYCHOLSKI: the supermarkets would not really be competitors, just locations where you sell your product Running Head: ECO 550 – Assignment 1 3 Bd * P/Q Independent Variables Ep Regression Coefficient (Bd) -420 Independent Variables(P) $5.00 Demand Quantity (Q) 8020 Elasticity -.261845387 Based on the calculation above for the independent variable of price, the elasticity for demand, the absolute value of the coefficient is .2618 indicating that the price elasticity is inelastic. Since the coefficient is less than 1, consumers are less sensitive to price change (Moffatt). If Eating Skinny were to lower their prices, there would little influence on the demand for their...
Words: 666 - Pages: 3
