Microeconomics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280618
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
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Problem 3
You have the following data for the last 12 months' sales for the PRQ Corporation (in thousands
of dollars):
January 500
July
610
February 520
August
620
March
520
September 580
April
510
October
550
May
530
November 510
June
580
December 480
1. Calculate a 3-month centered moving average.
2. Use this moving average to forecast sales for January of next year.
3. If you were asked to forecast January and February sales for next year, would you be confident
of your forecast using the preceding moving averages? Why or why not? expect? Explain.
Problem 5
The MNO Corporation is preparing for its stockholder meeting on May 15, 2013. It sent out proxies
to its stockholders on March 15 and asked stockholders who plan to attend the meeting to respond.
To plan for a sufficient number of information packages to be distributed at the meeting, as well
as for refreshments to be served, the company has asked you to forecast the number of attending
stockholders. By April 15, 378 stockholders have expressed their intention to attend. You have
available the following data for the last 6 years for total attendance at the stockholder meeting and
the number of positive responses as of April 15:
Year
Positive Responses
Attendance
2007
322
520
2008
301
550
2009
398
570
2010
421
600
2011
357
570
2012
452
650
1. What is your attendance forecast for the 2013 stockholder meeting?
2. Are there any other factors that could affect attendance, and thus make your forecast inac-
curate?
Problem 4
Office Enterprises (OE) produces a line of metal office file cabinets. The company's economist,
having investigated a large number of past data, has established the following equation of demand
for these cabinets:
Q=10,000+6013-100P+50C
Q=Annual number of cabinets sold
B = Index of nonresidential construction
P = Average price per cabinet charged by OE
C=Average price per cabinet charged by OE's closest competitor
It is expected that next year's nonresidential construction index will stand at 160, OE's average
price will be $40, and the competitor's average price will be $35.
1. Forecast next year's sales.
2. What will be the effect if the competitor lowers its price to 832? If it raises its price to $36?
3. What will happen if OE reacts to the decrease mentioned in part b by lowering its price to
$37?
4. If the index forecast was wrong, and it turns out to be only 140 next year, what will be the
effect on OE's sales? If not, what does it measure?
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