Answer to Question #187148 in Economics for Uzair

Question

Products’ Demand Estimation – Case Study

As a case study, select data about price, prices of substitutes, advertisement and trends and quantity demanded of any product such as Soft Drink (Pepsi), Fast food (Pizza Line), Cellular Services (Mobilink) etc. for “Demand Estimation" delving into the factors affecting the Products’ consumption and the ways to enhance its sales. It likewise looks into the factors positively or negatively affecting demand and sales.

Case Study questions

1. Estimate the demand for soft drinks using a multiple regression program on your computer.

2. Interpret the coefficients and calculate the price elasticity of soft drink demand.

Answer 1

Multiple regression is an econometric model that expresses the dependence of one explained (endogenous, effective) variable on two or more explanatory (exogenous, factor) variables. Multiple regression has found wide application in the process of explaining the development of a large number of economic processes. For example, the price of a house that is put up for sale is determined by its area, year of construction, location, subjective assessment of attractiveness, etc. The multiple regression model demonstrates how strongly a particular factor affects the value of the final cost.