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##### ECO-550 Assignment 2

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Question;Imagine that you work for the maker of a leading brand of low-calorie frozen, microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April.Estimated Demand Equation? QD = - 5200 ? 42(P) + 20(Px)+ 0.52(I)+ 0.20(A) + 0.25(M)Standard Errors of Estimate? (2.002) (17.5) (6.2) (2.5) (0.09) (0.21)(for calculating ?t-values?Other Regression statistics n = 26 R2 = 0.55 F = 4.88QD = Quantity demanded of 3-pack units for your company?s frozen foodP (in dollars) = Price of the product = \$5 per 3-pack unitPx (in dollars) = Price of leading competitor?s product = \$6 per 3-pack unitI (in dollars) = Per capita income of the standard metropolitan statistical area(SMSA) in which the supermarkets are located = \$5,500A (in dollars) = Monthly advertising expenditures = \$10,000M = Number of microwave ovens sold in the SMSA in which eachSupermarket is located = 5,000a) Plot the demand curve for your firm by using the following prices for its 3-pack unit: \$2, \$4. \$6, \$8, and \$10. Hint: Place the price (P) on vertical axis and the quantity demanded (QD) on the horizontal axis.b) Plot the corresponding supply curve on the same graph using the following supply functionQS = -79.1 + 79.1(P) with the same prices as in part a. (Remember: Price is placed on the verticalaxis and the quantity on the horizontal axis.)c) Determine the equilibrium price and quantity.

Paper#56416 | Written in 18-Jul-2015

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