DEMAND ESTIMATION

Interview and Experimental Methods

 The consumer interview (or survey) : questioning customers or potential customers to
estimate the relation between demand and a variety of underlying factors.
 Market experiments : An alternative technique for obtaining useful product demand
information involves market experiments.
 Simple Linear Demand Cueves : Sophisticated demand estimation is accurate and cost-
effective. Nobody drives a jet to a grocery store located within easy walking distance.

Simple Market Demand Curves Estimation

 Market demand is the firm’s total demand from various customer groups
 Market Demand : Curve Price-quantity demanded relation for all customers
 Identification Problem : Firm sometimes face problems in estimating demand relations

Regression Analysis
 Regression analysis is powerful statistical technique used to describe the ways in which
important economic variables are related
 Regression Analysis : Statistical technique that describes relations among dependent and
independent variables
 Deterministic Relation Association that is known with certainty

Measures Of Regression Model Significance

 Powerful desktop personal computers with sophisticated, user-friendly statictical

Judging Variable Significance

 Coefficient estimates and their standard deviantions (or standard errors) are used to
measure the precision of the relation between the dependent Y variable and a gives X
variable
FORECASTING AND CASE

Forecasting Applications
 Managers must make informed forecaasts when it comes to deciding on new
product introductions, pricing products, or making hiring decisions

Qualitative Analysis
 Qualitative analysis : intuitive approach to forecasting that can be useful if it
allows for the systematic collection of data from unbiased and informed
opinion
 Trend Analysis and Projection : trend analysis forecasting the future path of
economic variables based on historical patterns

Business Cycle
 Many important economic time series are regularly influenced by cyclical
and seasonal variations