You Work As A Market Analyst For Your Company

You estimated using the regression method the demand function of

Question

You work as a market analyst for your company. You estimated using the regression method the demand function of

the company’s product and you obtained the following.

Q = 8,400 – 10 P + 5 A + 4 Px + 0.05 M,

Where:

Q = Quantity demanded

P = Price = 1,000

A = Advertising expenditures, in thousands = 40

PX = price of competitor’s good = 800

M = average monthly consumer income = 4,000

a. Calculate the elasticity for each variable and briefly comment on what information this gives you in each case.

b. Is the company maximizing its revenue. If not, what is the profit maximizing price.

a ) Q = 8400 – 10 p + 54 + 4 Px +0,05M
= 8400 – 10. 1000 + 5. 40 + 4.800 +0,05. 4200 = 2000
ep =
29 1 – -10. 1000
3600
– OP Q
2000
40
2A Q
2000
epx
2Q Px – 4. 800
2 Px Q
2000
=46
em
2Q M
Q
-= 0of….Economics