ECO550 Managerial Economics Assignment #1 Demand estimation

Please, complete your week 3 assignment using the conditions below:

The following is a regression equation. Standard errors are in parentheses for the demand for widgets.

QD = 20,000 - 10P + 1500A + 5PX + 10Y (5.234) (2.29) (525) (1.75) (1.5)

R2 = 0.85, n = 120, F = 35.25

Your supervisor has asked you to compute the elasticities for each independent variable. Assume the following values for the independent variables:

Q = Quantity demanded P (in cents) = Price of the product = 8,000 PX (in cents) = Price of leading competitor’s product = 9,000 I (in dollars) = Per capita income of the standard metropolitan statistical area (SMSA) in which the supermarkets are located = 5,000 A (in dollars) = Monthly advertising expenditures = 64