DEMAND & SUPPLY ESTIMATIONOption 1:Note: The following is a regression equation. Standard errors are in parenthesis for the demandof widgets.QD=-5200-42P + 20Px + 5.2I + 0.20A + 0.25M(2.002) (17.5) (6.2) (2.5) (0.09) (0.21)R2= 0.55, N = 26 F= 4.88Your supervisor has asked you to compute the elasticity for each independent variable. Assumethe following values for the independent variables:Q D = Quantity demanded(Quantity demanded of 3-pack units)P (in cents) per case = Price of the product = 500 centsPX (in cents) = Price of leading competitor’s product = 600centsI (in dollars) = Per capita income of the standard metropolitan statistical area (SMSA) where thesupermarkets are located = 5500$A (in dollars) = Monthly advertising expenditures = $10,000M=Number of microwave ovens sold in the SMSA in which thesupermarkets are located = 5,000Preview Mode
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