Demand Analysis of low-calorie microwavable food Essay

QD = 20,000 10P + 1500A + 5PX + 10 ISince R2 is considerable high, the model explains the posit quite well. Putting the values of P, A, Px and I in the above equation, we get, Converting all wrong into dollars, we get,QD = 20,000 (108000) + (150064) + (59000) + (105000) = 131000Now, own value pushover (ep) = = -10, P = 8000, Q = 131000Own Price elasticity (ep) = 10 = 0.61 (approx.) pass a penetrate price elasticity (exy) = = 5, Px = 9000, Q = 131000Cross price elasticity (exy) = 5 = 0.34 (approx.)Income elasticity (eI) = = 10, I = 5000, Q = 131000Income elasticity (eI) = 10 = 0.38 (approx.)Advertisement elasticity (eA) = = 1500, A = 64, Q = 131000Advertisement elasticity (eA) = 1500 = 0.73 (approx.)From the above results, we tidy sum see that the own price elasticity is 0.61. hence the contract for the low-calorie microwavable food is inelastic in nature. This implies that an augment in the price of the food leads to the fall of the quantity hireed by less(prenomina l) than proportionate amount. Income elasticity of the good calculated is 0.38. This implies that the good selected is normal good. The cross price elasticity is 0.34. Therefore the two goods are almost reticence goods. Finally, coming to the adelasticity, we can see that the advertisement elasticity is 0.73. Thus advertisement has an important impact on the sales of the product.Since price elasticity is less than 1, total revenue will fall if price falls. provided the cross price elasticity of the product is almost close to zero. So, if the debauched will never lower its price to increase its market share.i) The demand curve s drawn belowii) At these prices there is ceaselessly an excess give. Thus market forces cannot determine the equilibrium.iii) The factors can influence demand and supply areDemand Advertisement, Income, price of the competitors product, etc. Supply technological improvement, supply shocks, etc.Increase in advertisement expenditure can increase the de mand this will shift the demand curve rightward.Similarly any reduction in advertisement expenditure will shift the demand curve leftward. Similarly, a rise in per capita income will shift the demand curve rightward and viceversa. Now, the supply curve can shift rightward if there is any improvement in the technology. On the separate hand any supply shock can shift the supply curve leftward.ReferencesVarian, H. R. (2011). Intermediate Microeconomics A Modern Approach (8th ed.). NY Norton Walter Nicholson, Christopher Snyder (2012). Microeconomic theory Basic Principles and Extensions (11th ed.). USA Cengage Learning TR Jain, VK Ohri (2010). Introductory Microeconomics and Macroeconomics (7th ed.). India V.K.Publications