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ME Project: Price Elasticity of Sugar Industry AND ITS Implication ON Total Revenue
ME Project: Price Elasticity of Sugar Industry AND ITS Implication ON Total Revenue
ME Project: Price Elasticity of Sugar Industry AND ITS Implication ON Total Revenue
ASHOK KUMAR
ASHUTOSH BURNWAL
ASHUTOSH MAHAJAN
ATISHAY KUMAR JAIN
ARPIT KHULLAR
ANKUR JAIN
BHAUMIT PATEL
Beginning of Sugar Industry in India
• Capital intensive
• Government regulated
• Seasonal fluctuation in the industry(demand
increases during festive season)
• Raw materials constitute major cost
• No proper substitutes
Manufacturing Process followed in Sugar Industry in India
P E R C EN T A G E C H A N GE IN T H E
QUANTITY DEMANDED DUE TO
P E R C E N T A G E C H A N GE I N P RI C E
E= ( Q/ P)X P/Q
Regression Analysis
in '000
tonnes Rs/quintal Rs in lacs 000 tonnes Rs/quintal
Sugar Prices of
Consu sugar(Medium per capita Populatio Sugar Prices of
mption Grade) income n Production jaggery
2001 16101 1543 16688 10096 18200.3 1145.42
2002 16201 1586 17782 10286 18511 1220.83
2003 16781 1425 18885 10476 18528 1187.5
2004 18384 1665 20871 10666 20145 1008.33
2005 17285 1825 23198 10856 13555.8 1274.17
2006 18500 1922 26003 11046 12690.1 1570.42
2007 18500 1471 29524 11236 19266 1590.42
2008 20000 1707 33283 11426 28364 1447.92
2009 22200 2700 37490 11616 26357.4 1485.42
THE EQUATION
REGRESSION EQUATION:
QS =C+A1PS + A2I+A3N
WHERE
QS: QUANTITY DEMANDED OF SUGAR
C: Y-INTERCEPT
PS: PRICE OF SUGAR
I: PER CAPITA INCOME
N: POPULATION OF THE COUNTRY
A1,A2,A3: CONSTANTS
P-VALUE
n=9, d.o.f=3
Critical F-statistic value = 5.41 at 5%significance level
Calculated F-statistic value=37.24
Coefficien Coefficie
ts P-value nts P-value
Intercept -26007.5 0.252845
Intercept -21652.3 0.599355
Prices of
Prices of sugar 2.119099 0.031354
sugar 1.966669 0.22027
Value: .94771
600000
500000
400000
Total Revenue in Millions
300000
200000
100000
0
2001 2002 2003 2004 2005 2006 2007 2008 2009
Variations in Price Elasticity
0.5
Arc Elasticity of Price
0
2001 2002 2003 2004 2005 2006 2007 2008 2009
-0.5
-1
DATA ANALYSIS(2007)
2006 2007
CONSUMPTION( 18500 18500
in ‘000 tonnes)
PRODUCTION(in 12690 19266 INCREMENT(50
‘000 tonnes) %)
PRICE(Rs/quintal 1922 1470 DECREMENT(9%
) )
Annual Production Pattern
4500
4000
3500
3000
2500
2000
1500
1000
500
0
Jan/05 Feb/05 Mar/05 Apr/05 May/05 Jun/05 Jul/05 Aug/05 Sep/05 Oct/05 Nov/05 Dec/05
OBSERVATIONS:-