CONSULTING PROJECT Estimation and analysis of demand for fast food meals Assignment

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 package–referred to as “Combination 1″ on its menus. The two restaurants face competition in the Atlanta suburb from five other hamburger restaurants (three MacDonald’s and two Wendy’s restaurants) and three other restaurants serving “drive-through” 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.
Data :
TABLE 1: Weekly Sales Data for Combination 1 Meals (1998)

week Q P A week Q P A
1 53,726 2.78 4,622 27 81,268 2.27 21,745
2 53,735 2.35 4,417 28 54,464 3.78 8,069
3 89,078 3.22 12,716 29 83,461 3.95 4,656
4 124,541 1.85 19,892 30 69,407 3.52 4,802
5 52,586 2.65 6,792 31 84,812 3.45 12,669
6 98,710 2.95 9,106 32 70,194 3.92 12,322
7 78,996 2.86 9,814 33 73,296 4.05 14,758
8 81,143 3.35 9,831 34 31,789 4.01 9,915
9 64,277 3.45 10,052 35 23,602 3.68 7,662
10 26,041 3.25 6,573 36 39,834 3.62 4,607
11 63,729 3.21 5,101 37 43,610 3.57 14,121
12 68,093 3.02 7,248 38 52,314 3.65 15,678
13 64,527 3.16 6,823 39 59,446 3.89 5,659
14 87,697 2.95 9,963 40 53,999 3.86 8,069
15 57,664 2.65 10,951 41 60,539 3.95 6,978
16 60,274 3.24 10,139 42 76,214 3.91 10,260
17 57,854 3.55 11,799 43 57,598 3.88 8,670
18 72,077 3.75 9,184 44 18,776 4.12 10,571
19 81,030 3.85 9,448 45 41,249 3.94 16,817
20 43,213 3.76 7,223 46 31,910 4.15 13,629
21 45,383 3.65 5,778 47 72,723 4.12 15,010
22 54,969 3.58 5,017 48 48,538 4.16 13,640
23 13,185 3.78 10,014 49 45,318 4 18,811
24 74,458 3.75 19,171 50 85,198 3.93 16,910
25 82,304 3.22 14,943 51 48,644 3.89 6,890
26 101,467 3.42 15,978 52 36,355 3.83 5,939

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 1 meals.
B) Using statistical software, estimate the parameters of the empirical demand function specified in part a. Write your estimated industry demand equation for Combo 1 meals.
C) Evaluate your regression results by examining signs of parameters, p-values (or t-ratios), and the
R2.
D)Discuss how the estimation of demand might be improved.
E) Using your estimated demand equation, calculate an own-price elasticity and an advertising elasticity. Compute the elasticity values at the sample mean values of the data in Table 1. Discuss, in quantitative terms, the meaning of each elasticity.
F) 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?
G) 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 1 meals.

Do you have a similar assignment/prompt? Let one of our professional writers take care of it. Place an order at Essaypanthers; pay only 50% of the order and send balance upon receiving your completed paper

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s