Explore BrainMass

Explore BrainMass

    percentage change in demand

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Border Snacks Inc. produces and sells picante sauce, nacho chips, and queso dip. The company's marketing department

    estimated a linear demand function for Border's picante sauce:

    QF = a + bPF + cM + dPN + ePQ

    where QF is the number of jars of picante sauce sold per month, PF is the price of picante sauce, PN is the price of a bag of nacho chips, PQ is the price of a jar of queso dip, and M is consumer income. In the market served by Border Snacks, income is currently $16,000. The following regression results were obtained using 22 monthly observations:

    a. Explain carefully and completely the meaning of the p-value for the parameter estimate on the price of nacho chips.

    b. If Border Snacks Inc. sets the price of picante at $6 per jar, the price of its nacho chips at $3 per bag, and the price of its queso dip at $8 per jar, what is the predicted sales of picante sauce?

    c. At the prices set in part b above, what is the price elasticity of demand for picante sauce?

    d. How will a 2.4% fall in the price of nacho chips affect the demand for picante sauce?

    © BrainMass Inc. brainmass.com October 9, 2019, 10:10 pm ad1c9bdddf


    Solution Summary

    The percentage change in demand is assessed.