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Unformatted text preview: ch action consistent with a company’s objective of profit maximisation?
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[TOTAL : 20 MARKS] 2 BMME5103/SEPT 07-F/KN Question 2
The maker of a leading brand of low-calorie microwavable food estimated the
following demand equation for its product using data from 26 supermarkets around
the country for the month of April: Q = - 5200 – 42P + 20Px + 5.2I + 0.20A + 0.25M
(2,002) (17.5) (6.2)
R2 = 0.55 (2.5) (0.09) n=26 (0.21) F=4.88 Assume the following values for the independent variables:
Q = Quantity sold per month P (in cents) = Price of the product = 500 Px (in cents) = Price of leading competitor’s product = 600 I (in dollars) = Per capita income of the standard metropolitan statistical
area (SMSA) in which the supermarket is located = 5,500 A (in dollars) = Monthly advertising expenditure = 10,000 M Number of microwave ovens sold in the SMSA in which the = supermarket is located = 5,000.
Using this informatio...
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- Spring '14