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)
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 coefficient 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
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.
Q3. What would be the impact of price changes on HOI on total revenue of Maa
mustard oil keeping other variables constant ?
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 Summer '17
 Supply And Demand, Hind Oil Industries, Hind Oil Industries Demand Analysis