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