The Kalamazoo Brewing Company (KBC) currently sells its microbrews in a seven-state area: Illinois, Indiana, Michigan, Minnesota, Mississippi, Ohio, and Wisconsin. The company’s data analytics department has collected data from its distributors in each state. This data consists of the quantity of cases and price (per case) of microbrews sold in each state, as well as the average income (in thousands of dollars) of consumers living in various regions of each state. The data for each state are available in the Excel file on Brightspace--please note there are multiple tabs at the bottom of the spreadsheet, each refers to one of the seven states selling the Kalamazoo Brewing Company’s microbrews. You will use the data to estimate the linear demand function for their microbrews in Indiana. To do this, perform the regression analysis in Excel for the data provided for Indiana. a. Write out the estimated linear demand function for microbrews in Indiana as a function of the price per case (P) and average income of consumers (M). Round each estimated value to two decimal places. b. Assume that the average consumer income is M = $35. For what range of prices is the demand for KBC’s microbrews elastic in Indiana? Unitary elastic? Inelastic? c. At what price is total revenue in the Indiana market maximized if M = $35? What is the value of marginal revenue at this price? d. Are KBC’s microbrews a normal or an inferior good in Indiana? Explain briefly in a few sentenc

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

The Kalamazoo Brewing Company (KBC) currently sells its microbrews in a seven-state area: Illinois, Indiana,
Michigan, Minnesota, Mississippi, Ohio, and Wisconsin. The company’s data analytics department has collected
data from its distributors in each state. This data consists of the quantity of cases and price (per case) of
microbrews sold in each state, as well as the average income (in thousands of dollars) of consumers living in
various regions of each state. The data for each state are available in the Excel file on Brightspace--please note
there are multiple tabs at the bottom of the spreadsheet, each refers to one of the seven states selling the
Kalamazoo Brewing Company’s microbrews. You will use the data to estimate the linear demand function for
their microbrews in Indiana. To do this, perform the regression analysis in Excel for the data provided for
Indiana.
a. Write out the estimated linear demand function for microbrews in Indiana as a function of the price per
case (P) and average income of consumers (M). Round each estimated value to two decimal places.
b. Assume that the average consumer income is M = $35. For what range of prices is the demand for KBC’s
microbrews elastic in Indiana? Unitary elastic? Inelastic?
c. At what price is total revenue in the Indiana market maximized if M = $35? What is the value of
marginal revenue at this price?
d. Are KBC’s microbrews a normal or an inferior good in Indiana? Explain briefly in a few sentenc

Quantity
83
83
97
103
101
88
81
99
98
103
102
88
105
98
93
88
92
92
86
93
86
87
108
88
98
92
93
99
105
88
97
93
101
90
106
87
98
89
83
104
97
76
98
82
94
99
89
75
92
97
Price
30.85
31.94
30.69
32.27
32.39
30.01
30.35
30.58
30.1
27.43
27.02
30.24
28.84
29.57
31.17
32.17
32.21
29.43
34.07
29.79
35.54
30.13
26.26
33.13
30.3
27.94
32.07
30.51
27.23
33.37
29.75
29.44
28.6
30.71
32.35
32.57
31.61
30.08
34.49
27.52
30.08
34.35
28.59
34.75
29.51
30.72
35.61
36.19
30.78
32.75
Income
31.9
31.77
36.86
40.79
37.06
34.03
33.52
32.78
37.02
35.88
36.01
32.55
37.14
33.84
35.82
35.68
36.24
33.66
34.85
32.51
34.97
33.81
35.24
37
38.6
30.02
36.88
36.15
36.09
36.44
34.99
31.71
34.46
32.6
40.61
36.37
37.34
32.81
34.1
32.3
35.26
32.25
33.53
34.15
33.95
35.66
34.48
34.09
35.15
37.34
Transcribed Image Text:Quantity 83 83 97 103 101 88 81 99 98 103 102 88 105 98 93 88 92 92 86 93 86 87 108 88 98 92 93 99 105 88 97 93 101 90 106 87 98 89 83 104 97 76 98 82 94 99 89 75 92 97 Price 30.85 31.94 30.69 32.27 32.39 30.01 30.35 30.58 30.1 27.43 27.02 30.24 28.84 29.57 31.17 32.17 32.21 29.43 34.07 29.79 35.54 30.13 26.26 33.13 30.3 27.94 32.07 30.51 27.23 33.37 29.75 29.44 28.6 30.71 32.35 32.57 31.61 30.08 34.49 27.52 30.08 34.35 28.59 34.75 29.51 30.72 35.61 36.19 30.78 32.75 Income 31.9 31.77 36.86 40.79 37.06 34.03 33.52 32.78 37.02 35.88 36.01 32.55 37.14 33.84 35.82 35.68 36.24 33.66 34.85 32.51 34.97 33.81 35.24 37 38.6 30.02 36.88 36.15 36.09 36.44 34.99 31.71 34.46 32.6 40.61 36.37 37.34 32.81 34.1 32.3 35.26 32.25 33.53 34.15 33.95 35.66 34.48 34.09 35.15 37.34
Expert Solution
Step 1

Given data:

Quantity Price Income
83 30.85 31.9
83 31.94 31.77
97 30.69 36.86
103 32.27 40.79
101 32.39 37.06
88 30.01 34.03
81 30.35 33.52
99 30.58 32.78
98 30.1 37.02
103 27.43 35.88
102 27.02 36.01
88 30.24 32.55
105 28.84 37.14
98 29.57 33.84
93 31.17 35.82
88 32.17 35.68
92 32.21 36.24
92 29.43 33.66
86 34.07 34.85
93 29.79 32.51
86 35.54 34.97
87 30.13 33.81
108 26.26 35.24
88 33.13 37
98 30.3 38.6
92 27.94 30.02
93 32.07 36.88
99 30.51 36.15
105 27.23 36.09
88 33.37 36.44
97 29.75 34.99
93 29.44 31.71
101 28.6 34.46
90 30.71 32.6
106 32.35 40.61
87 32.57 36.37
98 31.61 37.34
89 30.08 32.81
83 34.49 34.1
104 27.52 32.3
97 30.08 35.26
76 34.35 32.25
98 28.59 33.53
82 34.75 34.15
94 29.51 33.95
99 30.72 35.66
89 35.61 34.48
75 36.19 34.09
92 30.78 35.15
97 32.75 37.34
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 2 images

Blurred answer
Knowledge Booster
Profit Function
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education