Eco 550 Assignment 1 Demand Estimation

Demand Analysis of low-calorie microwavable food Students name Course title Date Professors Name QD 20,000 - 10P 1500A 5PX 10 I Since R2 is considerable high, the model explains the demand quite well. Putting the values of P, A, Px and I in the above equation, we get, Converting all price into dollars, we get, QD 20,000 (108000) (150064) (59000) (105000) 131000 Now, own price elasticity (ep) QUOTE QUOTE QUOTE -10, P 8000, Q 131000 Own Price elasticity (ep) - 10 QUOTE - 0.61 (approx.) Cross price elasticity (exy) QUOTE QUOTE QUOTE 5, Px 9000, Q 131000 Cross price elasticity (exy) 5 QUOTE 0.34 (approx.) Income elasticity (eI) QUOTE QUOTE QUOTE 10, I 5000, Q 131000 Income elasticity (eI) 10 QUOTE 0.38 (approx.) Advertisement elasticity (eA) QUOTE QUOTE QUOTE 1500, A 64, Q 131000 Advertisement elasticity (eA) 1500 QUOTE 0.73 (approx.) From the above results, we can see that the own price elasticity is - 0.61. Thus the demand for the low-calorie microwavable food is inelastic in nature. This implies that an increase in the price of the food leads to the fall of the quantity demanded by less than proportionate amount. Income elasticity of the good calculated is 0.38.