Answer to Question #138244 in Microeconomics for phan

Question

Suppose you build a model of the market for umbrellas, in which the
predicted number of umbrellas sold by a shop depends on their colour
and price, ceteris paribus.
1. The colour and the price are variables used to predict sales. Which
other variables are being held constant?

Which of the following questions do you think this model might be able
to answer? In each case, suggest improvements to the model that
might help you to answer the question.
2. Why are annual umbrella sales higher in the capital city than in
other towns?
3. Why are annual umbrella sales higher in some shops in the capital
city than others?
4. Why have weekly umbrella sales in the capital city risen over the
last six months?

Answer 1

1.Other variables that are kept constant are weather, location and quality.

2.It is due to the high population in the city as compared to other towns in the country.

3.It may be due to difference in price, good customer relations and some shops may be offering after sale services.

4.The weather during the period might be the one requiring the use of umbrella i.e rainy season.