07 Jun Question Assignment 1: Demand Estimation
Question
Assignment 1: Demand Estimation
Imagine that you work for the maker of a leading brand of low-calorie microwavable food that estimates
the following demand equation for its product using data from 26 supermarkets around the country for the
month of April.
For a refresher on independent and dependent variables, please go to Sophia’s Website and review the
Independent and Dependent Variables tutorial, located at http://www.sophia.org/tutorials/independentand-
dependent-variables–3.
Note: Your professor will provide you with the equation and data necessary for you to complete this
assignment. You will find this information attached to Assignment 1 within the course shell.
Write a four to six (4-6) page paper in which you:
ECO 550 Managerial Economics Assignment
1. Compute the elasticities for each independent variable. Note: Write down all of your calculations.
2. Determine the implications for each of the computed elasticities for the business in terms of shortterm
and long-term pricing strategies. Provide a rationale in which you cite your results.
3. Recommend whether you believe that this firm should or should not cut its price to increase its
market share. Provide support for your recommendation.
4. Assume that all the factors affecting demand in this model remain the same, but that the price
has changed. Further assume that the price changes are 100, 200, 300, 400, 500, 600 dollars.
a) Plot the demand curve for the firm.
b) Plot the corresponding supply curve on the same graph using the supply function Q =
5200 + 45P with the same prices.
c) Determine the equilibrium price and quantity.
d) Outline the significant factors that could cause changes in supply and demand for the
product. Determine the primary manner in which both the short-term and the long-term
changes in market conditions could impact the demand for, and the supply, of the
product.
5. Indicate the crucial factors that could cause rightward shifts and leftward shifts of the demand and
supply curves.
6. Use at least three (3) quality academic resources in this assignment. Note: Wikipedia does not
qualify as an academic resource.
Your (ECO 550 Managerial Economics Assignment 1 Demand Estimation
Assignment) assignment must follow these formatting requirements:
??Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all
sides; citations and references must follow APA or school-specific format. Check with your
professor for any additional instructions.
??Include a cover page containing the title of the assignment, the student’s name, the professor’s
name, the course title, and the date. The cover page and the reference page are not included in
the required assignment page length.
ECO 550 Managerial Economics Assignment 1 Demand Estimation
Assignment
The specific course learning outcomes associated with this assignment are:
??Analyze how production and cost functions in the short run and long run affect the strategy of
individual firms.
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