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  • Demand Estimation Function

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    KEHKASHAN NIZAM
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    The document describes a survey conducted by AIKON Inc. of demand for their mobile phones over 15 months that recorded sales, price, and advertising spending. It asks to estimate three demand curves from the data, explains why three curves are necessary, estimates sales if price is £50 and advertising is £100,000, and discusses what conclusions can be drawn about revenues and profits if price stays £50 but advertising increases to £110,000.

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    The document describes a survey conducted by AIKON Inc. of demand for their mobile phones over 15 months that recorded sales, price, and advertising spending. It asks to estimate three demand curves from the data, explains why three curves are necessary, estimates sales if price is £50 and advertising is £100,000, and discusses what conclusions can be drawn about revenues and profits if price stays £50 but advertising increases to £110,000.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    2 views1 page

    Demand Estimation Function

    Uploaded by

    KEHKASHAN NIZAM
    The document describes a survey conducted by AIKON Inc. of demand for their mobile phones over 15 months that recorded sales, price, and advertising spending. It asks to estimate three demand curves from the data, explains why three curves are necessary, estimates sales if price is £50 and advertising is £100,000, and discusses what conclusions can be drawn about revenues and profits if price stays £50 but advertising increases to £110,000.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 1

    Q.1 AIKON Inc. has recently carried out a survey of the demand for their mobile phones.

    They observed
    the following over the last fifteen months:

    Sales ('000 units) Price (£) Advertising (£'000)

    56 48 90
    60 54 100
    68 48 110
    68 42 90
    61 54 100
    70 40 90
    67 46 100
    75 44 110
    72 42 100
    70 50 110
    75 38 90
    78 42 100
    80 40 110
    70 44 90
    76 46 110
    a. Estimate three appropriate demand curves.

    b. Why is it necessary to estimate three different demand curves?

    c. Estimate sales when the price is £50 and advertising is £100,000, stating any assumptions that you
    need to make.

    d. If the firm charges £50 but increases advertising to £110,000, what conclusions can you derive in
    terms of revenues and profits?

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