What do these calculations suggest about the effects of changes in each of the

What do these calculations suggest about the effects

This preview shows page 4 - 8 out of 12 pages.

demand for Hind Oil Industries product. What do these calculations suggest about the effects of changes in each of the variables? Q (demand_Maa ) = a 0+ a 1 (own_price )+ a 2 (compe_price )+ a 3 (inc_per_capita )+ a 4 (pro_exp ) Q (demand_Maa) = 5024.753 - 136.6168 (own_price)+ 117.4078 (compe_price)-0.2823(inc_per_capita)+ 7.8651 (pro_exp)
Image of page 4
After looking at co efficient of all related factor of demand equation a0 = 5024.753 a0 is the intercept of quantity demanded that means when all factor are zero then quantity demanded will be 5024.753 units a1 = - 136.6168 a1 is the co-efficient of own price and the value suggest that with the increase of one unit in own price factor will decrease quantity demanded by 136.6168 units a2 = 117.4078 a2 is the co efficient of compe price (competitive product) and value suggest that with increase in one unit of compe price will have positive impact on quantity demanded i.e demad_maa (Q) will increase by 117.4078 units. a3 = -0.2823 a3 is the co efficient of inc_per_capita(income) and value suggest that it has negative impact i.e with the increase in one unit of inc_per_capita ,quantity demanded will decrease by 0.2823 units. a4 = + 7.8651 a4 is the co efficient of prop_exp (promotional expenditure) ,the value suggest that with the increase in one unit of prop_exp will have positive impact and quantity demanded will increase by 7.8651 units
Image of page 5
Calculating elasticity for all factors Cross elasticity of demand of comp_price is 0.90476 (+ve) which means that if the price of competitive products increases then consumer will switch to other products Price elasticity of demand of own_price is -0.93132 (-ve ) which means that if price of Maa mustard oil increases its price it will lead to decrease in the quantity demand of its product. Income elasticity of demand of inc_per_capita is -0.14407 (-ve) suggests that the hind oil product is an inferior goods which means with the increase in income the quantity demanded will decrease as people will move to better substitutes available in market Advertisement elasticity of demand of prop_exp is 0.70652 (+ve) that mens with increase in expenditure on advertisement ,the quantity demanded of said product will go up.
Image of page 6
Q3. What would be the impact of price changes on HOI on total revenue of Maa mustard oil keeping other variables constant ?
Image of page 7
Image of page 8

You've reached the end of your free preview.

Want to read all 12 pages?

  • Summer '17
  • Supply And Demand, Hind Oil Industries, Hind Oil Industries Demand Analysis

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes