MICROECONOMICS

EXPERIENTIAL LEARNING ASSIGNMENT

GROUP NO – 12
DIVISION – MARKETING B

Student Name PRN Number Roll Number

Yeddula Harshitha 23020141224 46324
Komal Agrawal 23020141226 46326
Anshuman Biswas 23020141227 46327
Ritika Das 23020141229 46329
Ahmad Yusuf 23020141232 46332
Bivek Kumar Gupta 23020141234 46334
Anubhuti Prasad 23020141243 46343
Avishi Gupta 23020141244 46344
Saksham Khanna 23020141246 46346
Abhishek Vatsa 23020141248 46348
Ajinkya Mantri 23020141250 46350
Answer 1:
R2 = 0.81; n =50
Critical t- stat : 2.03 Demand = Yi

Estimated log Yi = 9.05 - 0.57 X2i + 0.4 X3i - 0.012 X4i Price of biscuits = X2i
(1.02) (0.10) (0.15) (0.0048) Price of a close substitute = X3i
t-stat = 8.87 -5.7 2.67 -2.5 Daily wages = X4i

Logic used:

 A sample size (n) of 50 is used to create the equation. Since, it is greater than 30, we can analyse it further
 Modulus of t-stat values (|t-stat|) for intercept and coefficients are greater than the critical value of 2.03.
So, all of them are significant
 Goodness of fit (R2) value is 0.81 which lies in the range of 0.6 to 0.92. So, it is acceptable and regression line
captures 81% of the points
 From calculations, 1 unit increase in X2i results in [1-(e^(-0.57))]*100% = 43.4% decrease in Yi
 1 unit increase in X3i results in [e^(0.4)-1]*100% = 49.2% increase in Yi
 1 unit increase in X4i results in [1-(e^(-0.012))]*100% = 1.19% decrease in Yi
 As with rise in income, demand decreases keeping other parameters constant, indicating it is an inferior
good
 After performing calculations using partial differentiation keeping X3i and X4i constant, average price
elasticity of demand when the price of biscuits is ₹5 comes out to be -2.85 which indicates as the price
increases the demand for product decreases

Answer 2: Year Sales of wires t

(INR mln)
Using the equation: [St = 113.14 + 9.71 t] we calculated the t values corresponding
2009 120 0.706
to the sales data given from years 2009- 2015 as t values are not given. Next, we
2010 144 3.17
performed a regression analysis between the years and the t values calculated.
2011 150 3.79
We consider the years as the independent variable and the t values as the 1.74
2012 130
dependent variables. 2013 160 4.82
Next, on Excel we ran Regression with ‘Sales’ as the Y Variable and ‘t’ as the X variable. 2014 170 5.86
Then we selected Residuals, Line Fit Plots and Residual Plots to recognize 2015 190 7.92
forecasting trends.

Regression Statistics df SS MS F
Multiple R 0.88052176 Regression 1 2642.28571 2642.28571 17.2537313
R Square 0.77531858 Residual 5 765.714286 153.142857
Adjusted R Square 0.73038229 Total 6 3408
Standard Error 12.3750902
Observations 7

The above results were obtained. As the F-value is greater than 7 and the R^2 value in 0.775, the data is a good fit
for a line.

I. Forecast the sales for 2016.

Using the intercept and slope calculated previously we can approximate the Year t Sales
t value for the year 2016. The t value comes out to be 8.0. Substituting the 2016 8.0 190.86
t value for 2016 in the equation for sales, the expected sales come out to be 2017 9.0 200.57
₹190.86 Million for the year 2016. 2018 10.0 210.29
II. We calculated t values for different years. t value thus obtained is used to forecast the 2019 11.0 219.95
sales for those years. The company will undertake expansion upon reaching the sales 2020 12.0 229.71
target of ₹220 Million. Upon extending the trend line, it is observed that the company 2021 13.0 239.43
2022 14.0 249.14
reaches the sales target of ₹220 Million after 2019. Hence the company should plan to
undertake the expansion in the year 2020.