Answer to Question #182580 in Microeconomics for Ashitosh Phule

Question

what represent the tabular form of quantity demandesof a particular product during given period of time

Answer 1

As is known from economic theory, the law of demand is the relationship between the market price and demand in the form of an inverse relationship between demand and price. Evaluation of the law of demand is required both during product development and throughout the period when the product is on the market. Knowledge of the law of demand is also required for assessing market capacity, developing a product range, assessing the elasticity of demand, pricing, and solving other marketing problems. In turn, knowledge of the market capacity, combined with an assessment of the market share of the enterprise, makes it possible to assess the sales opportunities at the enterprise. Data collection and parameter estimation in a mathematical model of the law of demand belongs to the field of marketing research and is carried out by statisticians and econometrics.

There are three ways to estimate demand, starting with collecting and organizing data. The first and third methods can be used to analyze the intentions of consumers to purchase a product that has not yet been launched on the market and is under development.

The first way is direct expert judgment. When using the first method, a group of experts or a highly qualified expert is asked about the number of goods that can be purchased in the entire market at a specific price. The Delphi method can be used to summarize the experts' answers. The question is repeated for different values ​​of the estimated market price. The responses received directly represent demand at specific prices.

The second method is the econometric method of simultaneous equations. This method is focused on using a series of data on sales volumes in volume terms and on the corresponding prices. As a rule, this is a time series, which is associated with a change in the levels of other factors, therefore, data on changes in factors in dynamics are required. A solution is possible only when it is possible to separate the laws of supply and demand. The solution method is a system of simultaneous equations. This task laid the foundation for econometrics and is discussed in detail in the econometrics literature. Note that now econometrics as a curriculum is understood more broadly and includes the use of mathematical statistics in economics.

The third way is a logical questionnaire based on the "no more expensive than" principle. This method is based on the results of a survey of a set of consumers, each of whom is not a specialist in the market and can only report his reaction to the price. This is the most productive approach when the respondent reports or chooses the maximum price at which he is willing to buy one or more units of the product. The method has two options depending on the number of purchased goods.