Answer to Question #324795 in Microeconomics for antony

Question

24 months calculation

From this equation the expected sales for the next 12 months can be estimated.

Q = 6 200 – 40P + 25PC + 6.2Y + 0.3A + 0.20S

(2.002) (17.5) (6.2) (2.5) (0.09) (0.21) – standard deviation (SEC)

R2 = 0.55 n = 55 F = 4.88

• Q = Quantity sold per month (sales)

• P = Price = R2 900

• PC = Price of leading competitor’s product = R3 200

• Y = Average per capita income in the country = R25 000

• A = Homebase’s monthly advertising expenditure = R20 000

• S = Number of robot vacuum cleaners sold across the country =

7 000

2.1 Calculate the number of iRobot-H vacuum cleaners that H

is expected to sell over the next 12 months.

2.2 Calculate the elasticities for the price of iRobot-H (P), the product of the

leading competitor (PC), average income (Y) and advertising income (A).

2.3 What is the meaning of the variables –40P, +6.2Y and 0.20S?

2.4 What is the meaning of the equation R2= 0.55?

2.5 Determine the t-values for P, PC and Y, and discuss their significance.

Answer 1

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