Subject: Manegerial economics & policy Hypothesis 1: The price of pizza (X1) is an inverse determinant of the quantity of pizza demanded Hypothesis 2: Assuming tuition to be a proxy for income, pizza could be either a “normal” or an “inferior.” Therefore, we hypothesize that tuition (X2) is a determinant of the demand for pizza, but we cannot say beforehand whether it is an inverse or a direct determinant Hypothesis 3: The price of a soft drink (X3) is an inverse determinant of the demand for pizza Hypothesis 4: Location in an urban setting (X4) is expected to be an inverse determinant of the demand for pizza. Hypothesis 5: Pizza demand is expected to be lower at residential colleges (X5) than nonresidential colleges Q slice = 29 – 0.09 Px1 + 0.06 PX2 – 0.08 P X3 – 0.7 X4 – 3.4 X5 Answers following: 1) In our pizza example, what do the results indicate with respect to the price of pizza and the price of its complementary product, the soft drink? 2) Are these the key factors influencing the demand for pizza? 3) What is the implication of elasticity co-efficient for those in the pizza business?
Subject: Manegerial economics & policy
Hypothesis 1: The
Hypothesis 2: Assuming tuition to be a proxy for income, pizza could be either a “normal” or an “inferior.” Therefore, we hypothesize that tuition (X2) is a determinant of the
Hypothesis 3: The price of a soft drink (X3) is an inverse determinant of the demand for pizza
Hypothesis 4: Location in an urban setting (X4) is expected to be an inverse determinant of the demand for pizza.
Hypothesis 5: Pizza demand is expected to be lower at residential colleges (X5) than nonresidential colleges
Q slice = 29 – 0.09 Px1 + 0.06 PX2 – 0.08 P X3 – 0.7 X4 – 3.4 X5
Answers following:
1) In our pizza example, what do the results indicate with respect to the price of pizza and the price of its complementary product, the soft drink?
2) Are these the key factors influencing the demand for pizza?
3) What is the implication of elasticity co-efficient for those in the pizza business?
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