You and your team of analysts are working for AguaFlask, a Philippin

has been selling insulated water bottles since January 2019. AguaFlask
market for several years and is known for its high-quality insulated wa
market for insulated water bottles in the Philippines is competitive, wi
offering similar products. While the company's current pricing strategy
for some time, the management believes it's time for a change to keep
competition.

The database team has provided you with the company's sales figures
Using this data, management wants your team to accomplish the follow
1. Determine the firm's demand equation and demand curve.

2. Using the demand equation, compute for the price elasticity of dema
price. Determine if the firm should increase or decrease its current pric
3. Determine the price the firm should set in order to maximize reven
4. Determine the increase in the firm's current revenue if it decides to a
pricing strategy.
SUMMARY
OUTPUT

Regression Statistics

Multiple R 0.95879624406
R Square 0.91929023762

Adjusted R Square 0.91676805754

Standard Error 18.8301533994

Observations 34

ANOVA

df SS MS F Significance F

Regression 1 129236.2279816 129236.2 364.4824 4.720072923265E-19

Residual 32 11346.38966546 354.5747
Total 33 140582.6176471

Coefficients Standard Error t Stat P-value Lower 95%

Intercept 501.555596016 13.85829207499 36.19173 1.549E-27 473.327178804647

X Variable 1 -5.0800756472 0.266092050691 -19.09142 4.72E-19 -5.6220874177128

 Upper 95% Lower 95.0% Upper 95.0%
529.7840132266 473.32717880465 529.784013227

-4.53806387675 -5.6220874177128 -4.5380638767

Year Month Price Unit Sales (Q) Predicted Q Price Elasticity of Demand
2021 January 34 313 328.2 -0.6
2021 February 67 140 159.9 -2.4 D
2021 March 64 156 175.2 -2.1 400
2021 April 31 341 343.5 -0.5 350
2021 May 63 163 180.3 -2.0 300
2021 June 57 234 210.9 -1.2 250
2021 July 52 261 236.4 -1.0 200
2021 August 61 224 190.5 -1.4 150
2021 September 61 175 190.5 -1.8
100
2021 October 53 260 231.3 -1.0
50
2021 November 42 277 287.4 -0.8
0
2021 December 47 250 261.9 -1.0 25 30 35 4
2022 January 34 336 328.2 -0.5
2022 February 67 159 159.9 -2.1
2022 March 30 323 348.6 -0.5
2022 April 32 318 338.4 -0.5
2022 May 59 182 200.7 -1.7
2022 June 41 274 292.5 -0.8
2022 July 56 243 216 -1.2
2022 August 64 193 175.2 -1.7
2022 September 49 271 251.7 -0.9
2022 October 47 261 261.9 -0.9
2022 November 37 344 312.9 -0.5
2022 December 43 282 282.3 -0.8
2023 January 39 301 302.7 -0.7
2023 February 63 189 180.3 -1.7
2023 March 60 197 195.6 -1.6
2023 April 57 185 210.9 -1.6
2023 May 70 145 144.6 -2.5
2023 June 61 169 190.5 -1.8
2023 July 57 226 210.9 -1.3
2023 August 37 319 312.9 -0.6
2023 September 33 361 333.3 -0.5
2023 October 54 233 226.2 -1.2
 DEMAND CURVE CHART
00
50
00
50
00
50
00
50
0
25 30 35 40 45 50 55 60 65 70 75

Unit Sales (Q) Predicted Q

Place your final answers here:

1. Determine the firm's demand equation and demand curve.

Q=501.6-5.1P

2. Using the demand equation, compute for the price elasticity of demand at its current price. Determine if
the firm should increase or decrease its current price.
=dQ/dP x (P/Q)
=-5.1*(54/233)
-1.2

3. Determine the price the firm should set in order to maximize revenue.

Under this item, there could be two ways to solve for P and Q. Difference may be due to rounding off of
decimal places

SOLUTION 1 (based on demand function)

R=PQ
=(501.6-5.1P)P
=501.6P-5.1P^2
=501.6-10.2P Q=501.6-5.1P
0=501.6-10.2P =501.6-(5.1*49.2) New Revenue (1)
P=49.2 Q=250.7 12334.44

SOLUTION 2 (based on inverse demand function)

R=PQ
Q=501.6-5.1P
0.2Q-98.4=P inverse demand function
=(0.2Q-98.4)Q
=0.4Q-98.4 Q=501.6-5.1P
0=0.4Q-98.4 246=501.6-5.1P New Revenue (2)
Q=246 P= 50.1 12324.6

4. Determine the increase in the firm's current revenue if it decides to adopt this new pricing strategy.
Old Revenue New Revenue under solution 1
=54*226.2 12334.4
12214.8
New Revenue under solution 2
12324.6

SOLUTION 1 SOLUTION 2
New Revenue (1) less Old Revenue New Revenue (2) less Old Revenue
=12334.4-12214.8 =12324.6-12214.8
119.6 109.800000000001