Q1:-
What are the relevant factors to be considered for modelling a demand function for Maa
Mustard Oil? How is each factor related to elasticities of demand? How does the estimation of
demand function incorporate the impact of each factor using the multiple regression technique?
Factors are price of maa mustard oil, price of competitors, per capita income of customers, promotional
expenditure of maa mustard oil are the factors to be considered for modelling a demand function for
Maa mustard oil.
Factors Relation to Elasticities of Demand are as follows:
Price of Oil related to elasticities of demand :- Negative
Income of the Consumers- Negative
Price of competitors product:-
Positive
Promotional Expenditure of Maa Oil.- Positive
Preference of Consumers- Negative
Interpretation of Demand Function:
Q (demand_Maa)
= 5024.753-136.6168(own_price)+ 117.4078(compe_price) -
0.2823(inc_per_capita)+ 7.8651(pro_exp)
………………………………(Eqn 1)
● For a percentage change in quanƟty demanded of Maa mustard oil, its price should decrease by
136.62 times.

● For a percentage change in quanƟty demanded of Maa mustard oil, the price of compeƟtor's
products should increase by 117.41 times.

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- Spring '18
- Supply And Demand, quan ty, price of maa mustard oil, Maa Oil.- Positive, Hind Oil