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Demand can be estimated with experimental data




Demand can be estimated with experimental data, time-series data, or cross-section data. Sara Lee Corporation generates experimental data in test stores where the effect of a NFL-licensed Carolina Panthers logo on Champion sweatshirt sales can be carefully monitord. Demand forecasrs usually rely on time-series data. In contrast, cross-section data appear in Table 1. Soft drink consumption in cans per capita per year is related to six-pack price, income per capita, and mean temperature across the 48 contiguous states in the United States.;Questions;1. Estimate the demand for soft drinks using a multiple regression program available on your computer.;2. Interpret the coefficients and calculate the price elasticity of soft drink demand.;3. Omit price from the regression equation and observe the bias introduced into the parameter estimate for income.;4. Now omit both price and temperature from the regression equation. Should a marketing plan for soft drinks be designed that relocates most canned drink machines into low-income neighborhoods? Why or why not?


Paper#24685 | Written in 18-Jul-2015

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