X4 Promotional expenditure of Maa mustard oil OR Demand for Maa Mustard OIL

# X4 promotional expenditure of maa mustard oil or

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X4= Promotional expenditure of Maa mustard oil OR Demand for Maa Mustard OIL = 5024.58-136.62 (Price of Maa Mustard Oil) + 117.41 (Price of competitor's products)- 0.2823 (Per capita income of consumers) + 7.87 (Promotional expenditure of Maa mustard oil)
Q2. Analyze the estimated demand function and calculate the elasticities of demand for Hind Oil Industries’ product. What do these calculations suggest about the effects of changes in each of these variables? Answer: Demand for Maa Mustard OIL = 5024.58-136.62 (Price of Maa Mustard Oil) + 117.41 (Price of competitor's products)- 0.2823 (Per capita income of consumers) + 7.87 (Promotional expenditure of Maa mustard oil) In the Demand for Maa Mustard OIL, 5024.58 is a constant. The significance of the constant 5024.58 is that it embodies the effects of all factors other than price that affects demand. In other words, 5024.58 is the highest price anyone would pay when price of Maa mustard oil, price of competitor's products, per capital income of consumers and promotional expenditure of Maa mustard oil is zero. The constant - 136.62 is the slope of the demand curve and shows how the price of the good affects the quantity demanded. For a percentage change in quantity demanded of Maa mustard oil, its price should decrease by 136.62 times. 117.41 (Price of competitor's products) in the Demand Curve signifies that for a percentage change in quantity demanded of Maa mustard oil, the price of competitor's products should increase by 117.41 times. - 0.2823 (Per capita income of consumers) in the Demand Curve signifies that for a percentage change in quantity demanded of Maa mustard oil, the per capital income of consumers should decrease by 0.2823 times. 7.87 (Promotional expenditure of Maa mustard oil) in the Demand Curve signifies that for a percentage change in quantity demanded of Maa mustard oil, its promotional expenditure should increase by 7.87 times. Price Elasticity of Demand: PED Slope*P/Q Slope 136.62 (From the demand function) P 91.38 Q 13,256 Price elasticity of demand (PED): PED= 136.6167 ∗ ( 91.38 13256 ) = 0.9417 When the demand is inelastic (0<PED<1). The price changes don’t have any impact on the quantity demanded.

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