Hind Oil.pdf - EMPIRICAL PROJECT MICROECONOMICS Sumbitted by Name:Vineel Kumar Roll no 20L134 Economics Assignment Case study Hind Oil Industries Demand

Hind Oil.pdf - EMPIRICAL PROJECT MICROECONOMICS Sumbitted...

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EMPIRICAL PROJECT MICROECONOMICS Sumbitted by: Name :Vineel Kumar Roll no: 20L134
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Economics Assignment Case study : Hind Oil Industries Demand Analysis 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 multiple regression technique ? Ans: Factors that affect modelling of demand function of Maa mustard oil are Per capita NSDP(Net state domestic product ) Price of product Price of competitors product Promotional Expenditure Per capita NSDP will give income elasticity of demand Income elasticity of demand shows the measure of response of how quantity demanded varies with the change in income .If the income elasticity of demand is positive then it is normal goods and in case of negative it is an inferior goods Price of product will give Price elasticity of demand Price elasticity of demand is the measure how the changes in price of product affect quantity demanded of the same product. If price elasticity of demand is greater than 1 ,then its elastic i.e a small change in price will have larger impact on quantity demanded and if price elasticity is less than 1 it will be inelastic i.e a large change in price will have small change in quantity demanded and if price elasticity is 1 its unit elasticity i.e a change in price will cause an equal proportional change in quantity demanded. Price elasticity of demand will always be negative
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Price of competitors product will give Cross elasticity of demand Cross price elasticity of demand is the measure how quantity demanded product gets affected by the change in price of other product . Cross price elasticity of demand will be negative for complimentary goods(bread and butter) and positive for substitute goods (coffee and tea) Promotional Expenditure With increase in expenditure in advertisement and promotion will give product edge in market which will have impact on its quantity demanded On performing regression in R E(X) = a 0+ a 1 X 1+ a 2 X 2+ a 3 X 3+ a 4 X 4 Q ( demand_Maa) = a 0+ a 1 (own_price )+ a 2 ( compe_price)+ a 3 ( inc_per_capita)+ a 4 ( pro_exp)
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Q2. Analyze the estimated demand function and calculate the elasticities of demand for Hind Oil Industries product. What do these calculations suggest
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  • Summer '17
  • Supply And Demand, Hind Oil Industries, Hind Oil Industries Demand Analysis

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