Economics Class Assignment
–
1
GARVIT GUPTA
Tapmi Roll No:-20L109
Question1):
What are the relevant factors to be considered for modelling a demand function of Maa
Mustard oil? How each factor is related to elasticities of demand? How does the estimation of
demand function incorporate the impact of each factor using the multiple regression technique?
Answer1)
The Relevant Factors considered for modeling of maa Mustard oil are as follows:
❖
Per capita NSDP (Net state Domestic Product) Income.
❖
Competitors price per Kg.
❖
Promotional Expenditure.
❖
Price per kg of Maa Mustard oil.
❖
Quantity Sold or demand (in Kg).
Factors Related to Elasticity:
Per capita income: -
Here
Per capita income is depend on rise in per capita income of
west Bengal. So, in this
income elasticity of demand
(IED) will play a role here.
Percentage change in the quantity demanded resulting from a 1% percent increase in
income.
Competitors price per Kg: -
Competitors price comes in
cross-price elasticity of
demand
. So, percentage change in the quantity demanded of one good resulting
from 1- percentage increase in price of another product.
Price per kg: -
Price per Kg of Maa Mustard oil depends comes under
price elasticity
of demand.
So, Percentage change in quantity demanded of a good resulting from a
1-percent increase in its price.
E
p
= ∆Q/Q/∆
P/p
Estimation of demand function by using the multiple regression Technique:
Here, Demand function is taken as the dependent variable and other four variable
are taken as dependent variables.

Qmaa= 5024.58-136.62Op + 117.40 Cp - 0.2823 IPCp + 7.87PEp
.
Where Qmaa = Demand Maa Quantity
Op
= own Price
Cp
= Competitor Price
IPCp = Income Per Capita
PEp
= Promotional Expenditure price.

Question2): Analyze the estimated demand function and calculate the elasticities of demand
for Hind Oil Industries product? What do these calculations suggest about the effects
change?
Solution2)
As per the snapshot I calculated the PED, CPED and IED for all months in Excel but
here I am taking only sep-15 for Hind Oil Industries for analyzing the effect of changes.

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- Summer '17
- Supply And Demand, Qmaa