Overview
The assignment is based on the Hind Oil Industries pricing strategy dilemma. By reading the case below, and working through the explanations in this module, you will be able to complete the case questions successfully.
Question 1 What are the relevant factors to be considered for modeling a demand function for Maa mustard oil?
Question 2 How is each factor you have identified related to elasticities of demand?
Question 3 What model and functional form is appropriate to show the impact of each factor you have identified using OLS regression techniques and why?
Question 4 Use the data you have generated along with that which has been provided to run the regression and submit output statistics for approval in the output submission slot provided. Then, write the estimated demand function.
Question 5 Use the estimated demand function to forecast the demand for Maa mustard oil.
Question 6 Interpret the coefficient estimates.
Question 7 Analyze the model significance using the regression statistics: R-square, t-statistics, and use the standard error to determine the range within which demand for the product will fall with a 95% confidence interval.
Question 8 Calculate and interpret the following elasticities: Own price, cross price, income, and advertising and explain what these results suggest about the effects of changes in each of these variables on the demand for Maa mustard oil?
Question 9 Based on your elasticity estimates, what will be the impact of a price increase by the company on the total revenue of Maa mustard oil (assuming other variables remain constant)?
Question 10 What is the revenue maximizing price for Maa oil if the competitors price does not increase in October 2015? (Bonus)
Answer questions 1-10 on your excel spreadsheet or Word document which will be submitted at the end of the module.