Assignment 1
A1)
FACTOR WITH ELASTICITY OF DEMAND

1.
Price of oil
 Price of product changes the elasticity of demand. It is dependent on formula %
change in quantity demanded by % change in price.
2.
Price of competitors
 Price of competitors product affect the cross elasticity of demand. It is
dependent on formula % change in quantity demanded by % change in price.
3.
Customers per capita income
 In come elasticity of demand can be calculated using the per
capita income of customer. It is dependent on formula % change in quantity demanded by %
change in per capita income.
4.
Expenditure on promotion
 Expenditure of the oil has a good impact on the quantity
demanded as it shifts the curve towards the right.
The demand functional using multiple linear regression is as follows:
Done by Excel:
Done by R:
Demand for oil = 5024.58 136.62(Price of oil ) + 117.41(Price of
competitor’s products) –
0.2823(Per capita income of consumers) +
7.87 (Promotional
Expenditure of Mustard oil)
A2)
✓
The intercept in the demand function shows that the demand of Maa mustard oil shall
be 5024 rupees when price of Maa mustard oil, price of competitor's products, per
capital income of consumers and promotional expenditure of Maa mustard oil is zero.
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 Spring '18
 Supply And Demand, price of oil