Running Head: Demand Estimation 1 Demand Estimation 7 Demand Estimation Student Name Institutional Affiliation Instructor’s Name Demand Estimation Compute the elasticity for each independent variable. Note: Write down all of your calculations. When P= 500, C=600, I=5,500, A=10,000, & M=5000, using regression equation, QD= - 5200 – 42(500) + 20(600) + 5.2(5500) + 0.20(10000) + 0.25(5000) = 17,650 Price Elasticity = (P/Q) (∆Q/∆P) With regard to the regression equation, ∆Q/∆P = -42. Price Elasticity is therefore (Ep) = (P/Q) (-42) (500/17650) = -1.19, likewise, Ec = 20(600/17560) = 0.68. EA will be got as = (P/Q) (0.20) (10000/17650) = 0.11 EI = (P/Q) (5.2) (5500/17650) = 1.62 EM = (P/Q) (0.25) (5000/17650) = 0.07 Determine the implications for each of the computed elasticity for the business in terms of short-term and long-term pricing strategies. Provide a rationale in which you cite your results. Price elasticity is basically -1.19. This is representing the point that a 1 percent increase in the product’s price to lead to 1.19 percent decrease in the demanded quantity. This therefore makes the demand for this specific product to be elastic. Consequently, an increase in the income may dismiss away consumers (Chiappori & Ekeland, 2009). Cross price elasticity is got to be 0.68 meaning that if the competitor’s price of the products increases by 1%, the quantity demanded will basically increase by 0.68% for this particular product. It is therefore important to note that this product is somehow inelastic to the price of the competitor consequently creating no point of concern on the side of the competitor because their prices will not affect the sales (Kreps, 2013). Income elasticity is at 1.62. This indicates that a 1 % rise in the average area income will lead to an increase in the quantity demanded by 1.62%. Based on this, the product is considered to be elastic and the company can as well opt to increase the price if the average income rises. Advertisement elasticity is at 0.11 resulting to a perception that a 1% increase in the advertisement expenditure will increase the demanded quantity by 0.11%. Therefore demand is relatively high with regard to advertisement (Henderson, 2008). Due to this, additional advertisementdoes not automatically mean that an organization can increase the prices of its products since it can as well discourage its consumers. Considering microwave ovens situated on the region, elasticity is got at 0.07. This is a clear indication that if there is an increase of 1% in the quantity of ovens in the region, the quantity demanded will basically increase by 0.07%. With regard to this, demand is considered as inelastic and price strategy can neglect this element. Recommend whether you believe that this firm should or should not cut its price to increase its market share. Provide support f ...

1. Running Head: Demand Estimation
1
Demand Estimation 7
Demand Estimation
Student Name
Institutional Affiliation
Instructor’s Name
Demand Estimation
Compute the elasticity for each independent variable. Note:
Write down all of your calculations.
When P= 500, C=600, I=5,500, A=10,000, & M=5000, using
regression equation,
QD= - 5200 – 42(500) + 20(600) + 5.2(5500) + 0.20(10000) +
0.25(5000) = 17,650
Price Elasticity = (P/Q) (∆Q/∆P)
With regard to the regression equation, ∆Q/∆P = -42.
Price Elasticity is therefore (Ep) = (P/Q) (-42) (500/17650) = -
1.19, likewise,
Ec = 20(600/17560) = 0.68.
EA will be got as = (P/Q) (0.20) (10000/17650) = 0.11
EI = (P/Q) (5.2) (5500/17650) = 1.62

2. EM = (P/Q) (0.25) (5000/17650) = 0.07
Determine the implications for each of the computed elasticity
for the business in terms of short-term and long-term pricing
strategies. Provide a rationale in which you cite your results.
Price elasticity is basically -1.19. This is representing the point
that a 1 percent increase in the product’s price to lead to 1.19
percent decrease in the demanded quantity. This therefore
makes the demand for this specific product to be elastic.
Consequently, an increase in the income may dismiss away
consumers (Chiappori & Ekeland, 2009).
Cross price elasticity is got to be 0.68 meaning that if the
competitor’s price of the products increases by 1%, the quantity
demanded will basically increase by 0.68% for this particular
product. It is therefore important to note that this product is
somehow inelastic to the price of the competitor consequently
creating no point of concern on the side of the competitor
because their prices will not affect the sales (Kreps, 2013).
Income elasticity is at 1.62. This indicates that a 1 % rise in the
average area income will lead to an increase in the quantity
demanded by 1.62%. Based on this, the product is considered to
be elastic and the company can as well opt to increase the price
if the average income rises.
Advertisement elasticity is at 0.11 resulting to a perception that
a 1% increase in the advertisement expenditure will increase the
demanded quantity by 0.11%. Therefore demand is relatively
high with regard to advertisement (Henderson, 2008). Due to
this, additional advertisementdoes not automatically mean that
an organization can increase the prices of its products since it
can as well discourage its consumers.
Considering microwave ovens situated on the region, elasticity
is got at 0.07. This is a clear indication that if there is an
increase of 1% in the quantity of ovens in the region, the
quantity demanded will basically increase by 0.07%. With
regard to this, demand is considered as inelastic and price
strategy can neglect this element.
Recommend whether you believe that this firm should or should

3. not cut its price to increase its market share. Provide support for
your recommendation.
Due to the fact that elasticity is higher than the absolute value,
a decrease in the price will basically lead to a bigger rise in the
demanded quantity in terms of percentage leading to an increase
of shares in the market. Reducing the price will therefore be
instrumental because it will lead to an increase in the
company’s sharessince PED is generally greater than 1.19.
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 cents.
i) Plot the demand curve for the firm. (Please refer to the
attached Excel document).
ii) Plot the corresponding supply curve on the same graph using
the supply function Q = 5200 + 45P (Q= -7909.89+79.0989P)
with the same prices. (Please refer to the attached Excel
document).
iii) Determine the equilibrium price and quantity
iv) 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.
Solution
s:
When all other factors are kept constant, the demand equation is
got by:
Q = -5200 - 42(P) + 20(600) +5.2(5500) +0.2(10,000)
+0.25(5000)

4. Q = 38,650 – 42P
P = 38,650/42-Q/42
Q = 5200 =45P
P = - 5200/45 + Q/45
Therefore, analysing and solving the demand and supply curves
simultaneously will be:
38,650 - 42P = 5200 + 45P
87P = 33,450
P = 384.48 while
Q = 5200 + 45(384.48)
Q = 22,501.6
The equilibrium price therefore becomes 384 cents whereas the
equilibrium quantity becomes22501 units. Additionally, the
equilibrium and quantity price from the graph can be seen at the
point where supply and demand meets.
As is evident in the demand equation, demand for low-calorie
food may basically change if the consumer income takes charge
as a result of competitor product pricing, and price of
correlating goods like the microwave oven. This specific change
can also occur whenever there is analteration in the consumer
preference, for example, awareness of low calorie foods.
Additionally, product supply can also experience some little
changes particularly if there is a change in elements like labour
and availability of raw materials which can impact directly on
the cost of production (Pindyck & Rubinfeld, 2005).

5. Indicate the crucial factors that could cause rightward shifts and
leftward shifts of the demand and supply curves.
An increase in consumers’ income and price reduction in the
cost of corresponding products such as microwave ovens, can
basically result to a rightward shift of demand curve as well
asincreased preference for the product i.e. awareness concerning
low-calorie food or even increase in population. A reduction in
the consumers’ income can result to a leftward shift of the
demand curve (Kreps, 2013). Additionally, an increase in the
price of complementary products could lead to a leftward
change of the demand curve.
Increased accessibility of raw materials as well as cheap labour,
increase in government subsidies and tax cuts and advancement
in technology in food processing can basically lead to a
rightward shift of the supply curve (Kreps, 2013). A leftward
shift can generate from a decreased availability or an increase
in the cost of labour, raw materials and even an increase in
taxes among other factors.

6. References
Chiappori, P., & Ekeland, I. (2009). The Economics &
Mathematics of Aggregation (1st Ed.). Boston: Now.
Henderson, H. (2008). Supply &Demand (1st Ed.). [Chicago]:
University of Chicago Press.
Kreps, D. (2013). Microeconomic Foundations I (1st Ed.).
Princeton: Princeton University Press. Book
Pindyck, R., & Rubinfeld, D. (2005). Microeconomics (1st Ed.).
Upper Saddle River, N.J.: Pearson Prentice Hall.
1. What is the legal effect of an agreement that is criminal,
tortious, or otherwise contrary to public policy, and why does it
have that effect?
ANSWER:
2. Stan orally agreed to sell his house to Humphrey and
Humphrey made a down payment. Humphrey wanted it ready for
his family quickly, so he had a new roof put on, new carpeting
installed, and renovated the kitchen. Stan now thinks the place
looks great and has decided not to sell. A business law student
told him he could refuse to sell because the agreement was oral.
Can he? Explain.
ANSWER:

7. 3. Explain what may constitute a material breach and list the
relevant factors in determining if a material breach exists.
ANSWER:
4. Matt and Ron would like to form a corporation. Discuss
what is required in most states to form a corporation.
ANSWER:
5. Elmer has been a faithful worker at the Middle America
Manufacturing Company for over 30 years. One day when he
comes to work, he gets called into the supervisor's office and is
told that the company has decided to lay off all of its current
employees and move the plant to India.
a. Does Elmer have any protections under the common law
doctrine of employment at will? Explain.
b. Does Elmer have any protections under employment
discrimination law? Explain.
ANSWER:
Students, please view the "Submit a Clickable Rubric
Assignment" in the Student Center.
Instructors, training on how to grade is within the Instructor
Center.
Assignment 2: Operations Decision

8. Due Week 6 and worth 300 points
Using the regression results and the other computations from
Assignment 1, determine the market structure in which the low-
calorie frozen, microwavable food company operates.
Use the Internet to research two (2) of the leading competitors
in the low-calorie frozen, microwavable food industry, and take
note of their pricing strategies, profitability, and their
relationships within the industry (worldwide).
Write a six to eight (6-8) page paper in which you:
1. Outline a plan that will assess the effectiveness of the market
structure for the company’s operations. Note: In Assignment 1,
the assumption was that the market structure [or selling
environment] was perfectly competitive and that the equilibrium
price was to be determined by setting QD equal to QS. You are
now aware of recent changes in the selling environment that
suggest an imperfectly competitive market where your firm now
has substantial market power in setting its own “optimal” price.
2. Given that business operations have changed from the market
structure specified in the original scenario in Assignment 1,
determine two (2) likely factors that might have caused the
change. Predict the primary manner in which this change would
likely impact business operations in the new market
environment.
3. Analyze the major short run and long cost functions for the
low-calorie, frozen microwaveable food company given the cost

9. functions below. Suggest substantive ways in which the low-
calorie food company may use this information in order to make
decisions in both the short-run and the long-run.
TC = 160,000,000 + 100Q + 0.0063212Q2VC = 100Q +
0.0063212Q2MC= 100 + 0.0126424Q
4. Determine the possible circumstances under which the
company should discontinue operations. Suggest key actions
that management should take in order to confront these
circumstances. Provide a rationale for your response. (Hint:
Your firm’s price must cover average variable costs in the short
run and average total costs in the long run to continue
operations.)
5. Suggest one (1) pricing policy that will enable your low-
calorie, frozen microwavable food company to maximize
profits. Provide a rationale for your suggestion.
(Hints:
· In Assignment 1, you determined your firm’s market demand
equation. Now you need to find the inverse demand equation.
Having found that, find the Total Revenue function for your
firm (TR is P x Q). From your firm’s Total Revenue function,
then find your Marginal Revenue (MR) function.
· Use the profit maximization rule MR = MC to determine your
optimal price and optimal output level now that you have
market power. Compare these values with the values you
generated in Assignment 1. Determine whether your price

10. higher is or lower.)
6. Outline a plan, based on the information provided in the
scenario, which the company could use in order to evaluate its
financial performance. Consider all the key drivers of
performance, such as company profit or loss for both the short
term and long term, and the fundamental manner in which each
factor influences managerial decisions.
(Hints:
· Calculate profit in the short run by using the price and output
levels you generated in part 5. Optional: You may want to
compare this to what profit would have been in Assignment 1
using the cost function provided here.
· Calculate profit in the long run by using the output level you
generated in part 5 and cost data in part 3 and assuming that the
selling environment will likely be very competitive. Determine
why this would be a valid assumption.)
7. Recommend two (2) actions that the company could take in
order to improve its profitability and deliver more value to its
stakeholders. Outline, in brief, a plan to implement your
recommendations.
8. Use at least five (5) quality academic resources in this
assignment. Note: Wikipedia does not qualify as an academic
resource.
Your assignment must follow these formatting requirements:
· Be typed, double spaced, using Times New Roman font (size

11. 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.
The specific course learning outcomes associated with this
assignment are:
· Analyze short-run and long-run production and cost functions.
· Apply macroeconomic concepts to changes in global and
national economies and how they affect economic growth,
inflation, interest rates, and wage rates.
· Evaluate the profit-maximizing price and output level for
given operating costs for monopolies and firms in competitive
industries.
· Use technology and information resources to research issues in
managerial economics and globalization.
· Write clearly and concisely about managerial economics and
globalization using proper writing mechanics.
Click here to view the grading rubric.