In the data shown in the table below, Q is the total number of hamburgers sold, P is the average price charged for a hamburger, A is the dollar amount spent on newspaper ads for each week. Assume that household income and population did not change during this period. Using the data in Table 1,
1. Specify a linear functional form for the demand for hamburgers.
2. Using Excel (or other statistical software), run a regression to estimate the demand for hamburgers (Attach your output from the regression). and
3. Write your estimated demand equation for hamburgers.
week Q P A week Q P A
1 51,345 2.78 4,280 27 78,953 2.27 21,225
2 50,337 2.35 3,875 28 52,875 3.78 7,580
3 86,732 3.22 12,360 29 81,263 3.95 4,175
4 118,117 1.85 19,250 30 67,260 3.52 4,365
5 48,024 2.65 6,450 31 83,323 3.45 12,250
6 97,375 2.95 8,750 32 68,322 3.92 11,850
7 75,751 2.86 9,600 33 71,925 4.05 14,360
8 78,797 3.35 9,600 34 29,372 4.01 9,540
9 59,856 3.45 9,600 35 21,710 3.68 7,250
10 23,696 3.25 6,250 36 37,833 3.62 4,280
11 61,385 3.21 4,780 37 41,154 3.57 13,800
12 63,750 3.02 6,770 38 50,925 3.65 15,300
13 60,996 3.16 6,325 39 57,657 3.89 5,250
14 84,276 2.95 9,655 40 52,036 3.86 7,650
15 54,222 2.65 10,450 41 58,677 3.95 6,650
16 58,131 3.24 9,750 42 73,902 3.91 9,850
17 55,398 3.55 11,500 43 55,327 3.88 8,350
18 69,943 3.75 8,975 44 16,262 4.12 10,250
19 79,785 3.85 8,975 45 38,348 3.94 16,450
20 38,892 3.76 6,755 46 29,810 4.15 13,200
21 43,240 3.65 5,500 47 69,613 4.12 14,600
22 52,078 3.58 4,365 48 45,822 4.16 13,250
23 11,321 3.78 9,525 49 43,207 4.00 18,450
24 73,113 3.75 18,600 50 81,998 3.93 16,500
25 79,988 3.22 14,450 51 46,756 3.89 6,500
26 98,311 3.42 15,500 52 34,592 3.83 5,650
Assume you have the following demand function from above: Q = 100,000
In the data shown in the table below, Q is the total number of hamburgers sold, P is the average price charged for a hamburger, A is the dollar amount spent on newspaper ads for each week. Assume that household income and population did not change during this period. Using the data in Table 1,
1. Specify a linear functional form for the demand for hamburgers.
2. Using Excel (or other statistical software), run a regression to estimate the demand for hamburgers (Attach your output from the regression). and
3. Write your estimated demand equation for hamburgers.
week Q P A week Q P A
1 51,345 2.78 4,280 27 78,953 2.27 21,225
2 50,337 2.35 3,875 28 52,875 3.78 7,580
3 86,732 3.22 12,360 29 81,263 3.95 4,175
4 118,117 1.85 19,250 30 67,260 3.52 4,365
5 48,024 2.65 6,450 31 83,323 3.45 12,250
6 97,375 2.95 8,750 32 68,322 3.92 11,850
7 75,751 2.86 9,600 33 71,925 4.05 14,360
8 78,797 3.35 9,600 34 29,372 4.01 9,540
9 59,856 3.45 9,600 35 21,710 3.68 7,250
10 23,696 3.25 6,250 36 37,833 3.62 4,280
11 61,385 3.21 4,780 37 41,154 3.57 13,800
12 63,750 3.02 6,770 38 50,925 3.65 15,300
13 60,996 3.16 6,325 39 57,657 3.89 5,250
14 84,276 2.95 9,655 40 52,036 3.86 7,650
15 54,222 2.65 10,450 41 58,677 3.95 6,650
16 58,131 3.24 9,750 42 73,902 3.91 9,850
17 55,398 3.55 11,500 43 55,327 3.88 8,350
18 69,943 3.75 8,975 44 16,262 4.12 10,250
19 79,785 3.85 8,975 45 38,348 3.94 16,450
20 38,892 3.76 6,755 46 29,810 4.15 13,200
21 43,240 3.65 5,500 47 69,613 4.12 14,600
22 52,078 3.58 4,365 48 45,822 4.16 13,250
23 11,321 3.78 9,525 49 43,207 4.00 18,450
24 73,113 3.75 18,600 50 81,998 3.93 16,500
25 79,988 3.22 14,450 51 46,756 3.89 6,500
26 98,311 3.42 15,500 52 34,592 3.83 5,650
Assume you have the following demand function from above: Q = 100,000
Related textbook solutions
Related questions
Using the data below, I need answers to the following questions:
a) Using the data in Table 1, specify a linear functional form for the demand for Combination 1 meals, and run a regression to estimate the demand for Combo 1meals.
b) Using statistical software (Excel), estimate the parameters of the empirical demand function specifiedin part a.Write your estimated industry demand equation.
c) Evaluate your regression results by examining signs of parameters, p-values, and the R2.
d) Discuss how the estimation of demand might beimproved.
e) If the owner plans to charge a price of 4.15 for a Combination 1 meal and spend $18,000 per week on advertising, how many Combination 1 meals do you predict will be sold each week?
f) If the owner spends $18,000 per week on advertising, write the equation for the inverse demand function. Then, calculate the demand price for 50,000 Combination meals.
Estimation and Analysis of Demand for Fast Food Meals
You work for PriceWatermanCoopers as a market analyst. PWC has been hired by the owner of two Burger King restaurants located in a suburban Atlanta market area to study the demand for its basic hamburger meal packageâreferred to as âCombination 1" on its menus. The two restaurants face competition in the Atlanta suburb from five other hamburger restaurants (three MacDonaldâs and two Wendyâs restaurants) and three other restaurants serving âdrive-throughâ fast food (a Taco Bell, a Kentucky Fried Chicken, and a small family-owned Chinese restaurant).
The owner of the two Burger King restaurants provides PWC with the data shown in Table 1. Q is the total number of Combination 1 meals sold at both locations during each week in 1998. P is the average price charged for a Combination 1 meal at the two locations. [Prices are identical at the two Burger King locations.] Every week the Burger King owner advertises special price offers at its two restaurants exclusively in daily newspaper advertisements. A is the dollar amount spent on newspaper ads for each week in 1998. The owner could not provide PWC with data on prices charged by other competing restaurants during 1998. For the one-year time period of the study, household income and population in the suburb did not change enough to warrant inclusion in the demand analysis.
TABLE 1: Weekly Sales Data for Combination 1 Meals (1998)
week Q P A week Q P A
| 1 | 51,345 | 2.78 | 4,280 | 27 | 78,953 | 2.27 | 21,225 |
| 2 | 50,337 | 2.35 | 3,875 | 28 | 52,875 | 3.78 | 7,580 |
| 3 | 86,732 | 3.22 | 12,360 | 29 | 81,263 | 3.95 | 4,175 |
| 4 | 118,117 | 1.85 | 19,250 | 30 | 67,260 | 3.52 | 4,365 |
| 5 | 48,024 | 2.65 | 6,450 | 31 | 83,323 | 3.45 | 12,250 |
| 6 | 97,375 | 2.95 | 8,750 | 32 | 68,322 | 3.92 | 11,850 |
| 7 | 75,751 | 2.86 | 9,600 | 33 | 71,925 | 4.05 | 14,360 |
| 8 | 78,797 | 3.35 | 9,600 | 34 | 29,372 | 4.01 | 9,540 |
| 9 | 59,856 | 3.45 | 9,600 | 35 | 21,710 | 3.68 | 7,250 |
| 10 | 23,696 | 3.25 | 6,250 | 36 | 37,833 | 3.62 | 4,280 |
| 11 | 61,385 | 3.21 | 4,780 | 37 | 41,154 | 3.57 | 13,800 |
| 12 | 63,750 | 3.02 | 6,770 | 38 | 50,925 | 3.65 | 15,300 |
| 13 | 60,996 | 3.16 | 6,325 | 39 | 57,657 | 3.89 | 5,250 |
| 14 | 84,276 | 2.95 | 9,655 | 40 | 52,036 | 3.86 | 7,650 |
| 15 | 54,222 | 2.65 | 10,450 | 41 | 58,677 | 3.95 | 6,650 |
| 16 | 58,131 | 3.24 | 9,750 | 42 | 73,902 | 3.91 | 9,850 |
| 17 | 55,398 | 3.55 | 11,500 | 43 | 55,327 | 3.88 | 8,350 |
| 18 | 69,943 | 3.75 | 8,975 | 44 | 16,262 | 4.12 | 10,250 |
| 19 | 79,785 | 3.85 | 8,975 | 45 | 38,348 | 3.94 | 16,450 |
| 20 | 38,892 | 3.76 | 6,755 | 46 | 29,810 | 4.15 | 13,200 |
| 21 | 43,240 | 3.65 | 5,500 | 47 | 69,613 | 4.12 | 14,600 |
| 22 | 52,078 | 3.58 | 4,365 | 48 | 45,822 | 4.16 | 13,250 |
| 23 | 11,321 | 3.78 | 9,525 | 49 | 43,207 | 4.00 | 18,450 |
| 24 | 73,113 | 3.75 | 18,600 | 50 | 81,998 | 3.93 | 16,500 |
| 25 | 79,988 | 3.22 | 14,450 | 51 | 46,756 | 3.89 | 6,500 |
| 26 | 98,311 | 3.42 | 15,500 | 52 | 34,592 | 3.83 | 5,650 |
