Demand Forecasting of Oranges
Assignment
On
Estimation of the Demand for Oranges by Market Experiment
Title: Elasticity of Demand with respect to Price.
Protagonist: Here, We consider Florida Interior Oranges as the protagonist. The reasons are explained bellow. * When there is 1% increase in the price of Florida Indian river oranges, there is 1.56% growth in demand of the Florida Interior oranges. * When there is 1% increase in the price of Florida Interior oranges, there is 1.16% growth in the demand of the Florida Indian river oranges. * When there is 1% increase in the price of California oranges, there is 0.9% growth in the demand for the Florida Interior Oranges, though it is not a close substitute of California oranges. * When the price of Florida Interior increase by 1%, the demand of Florida Interior decreased but the demand of California increased by 0.14%` * The above points shows that there is an increased demand for this product and in this case people prefer Florida interior as a substitute for California oranges which is a consumer preferred commodity. * For market experiment a site is chosen keeping in mind its size, demographic characteristics and economic base. * There should be adequate supply of the product to be experimented. * The time period of experiment should be kept sufficiently short so as to ensure no change in taste, incomes, population, the rate of inflation, and determinants of demand other than price. * Two products are considered as close substitutes of each other, any change regarding quantity/quality/price, of one will affect the demand of the other. * The price of experimental commodity is kept near to the price of other related commodities of same class available in the market.
Lesson Learnt When price of certain commodity increases, its demand definitely decreases only in the case where a substitute is available for the same product at a
On
Estimation of the Demand for Oranges by Market Experiment
Title: Elasticity of Demand with respect to Price.
Protagonist: Here, We consider Florida Interior Oranges as the protagonist. The reasons are explained bellow. * When there is 1% increase in the price of Florida Indian river oranges, there is 1.56% growth in demand of the Florida Interior oranges. * When there is 1% increase in the price of Florida Interior oranges, there is 1.16% growth in the demand of the Florida Indian river oranges. * When there is 1% increase in the price of California oranges, there is 0.9% growth in the demand for the Florida Interior Oranges, though it is not a close substitute of California oranges. * When the price of Florida Interior increase by 1%, the demand of Florida Interior decreased but the demand of California increased by 0.14%` * The above points shows that there is an increased demand for this product and in this case people prefer Florida interior as a substitute for California oranges which is a consumer preferred commodity. * For market experiment a site is chosen keeping in mind its size, demographic characteristics and economic base. * There should be adequate supply of the product to be experimented. * The time period of experiment should be kept sufficiently short so as to ensure no change in taste, incomes, population, the rate of inflation, and determinants of demand other than price. * Two products are considered as close substitutes of each other, any change regarding quantity/quality/price, of one will affect the demand of the other. * The price of experimental commodity is kept near to the price of other related commodities of same class available in the market.
Lesson Learnt When price of certain commodity increases, its demand definitely decreases only in the case where a substitute is available for the same product at a