It has been observed that since there is a 10 unit increase between Custom Essay

  1. It has been observed that since there is a 10 unit increase between the 3rd year and the 4th years that the 5th year prediction should be150.  Do you agree or disagree?  Explain your rationale
  2. When average change per year over the dynamic range of the sales is (140-115)/3= 6.667.  Accordingly, it has been suggested the forecast for the 5th year should be 146.667 or 147 units.  Do you agree or disagree?  Explain your rationale.

 

#2: A vendor is interested in the best price to charge at his various dispensors located in a given area.  Over a period of time, he has collected the below monthly data on its sales of a given item for different prices.

 

 

1

2

3

4

5

6

7

8

9

10

Price

.75

.80

.75

.70

.70

.80

.75

.75

.70

.70

Quantity

95

85

90

88

102

94

100

104

112

115

 

  1. Estimate the linear regression demand equation.  If the price is cut by $0.15, by how much will the volume of sales change?
  2. Estimate the demand equation using a log-linear regression of the form Q=kP^b.  What is the price elasticity of demand?  Does this equation fit the data better than the part a equation? Explain?

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