Pool Vac
ECN510 – Mr. Santos
PoolVac, Inc. manufactures and sells a single product called the “Sting Ray,” which is a patent-protected automatic cleaning device for swimming pools. PoolVac’s Sting Ray faces its closest competitor, Howard Industries, also selling a competing pool cleaner. Using the 26 observations report we calculated pricing and cash flows.
The General Demand equation used is
QD = a + bP + cMavg + dPh
Where a is the dependent variable, bP is the price of the PoolVac good, cMavg is the average household income, and the dPh is the price of the related good (Howard Industries). . An estimated demand equation for PoolVac is:
Qd = 2729 – 10.8P + 0.0214Mavg + 3.17Ph
Where, bP is the price of the PoolVac good, cMavg is the average household income, and the dPh is the price of the related good (Howard Industries). So, we see the good sold by PoolVac (the Automatic Swimming Pool Cleaner) is considered a normal good. We know this due to the general demand formula and the LAW OF DEMAND, for every $1 dollar increase in the price of the PoolVac good, we see the quantity demanded decreases by 10.8 units. We can also state, the Howard Industry good is a substitute good. We know this based on the values from the general demand function formula. So for every $1 dollar increase in the price of the Howard Industry good, we see the quantity demanded of the PoolVac good increases by 3.17 units (when holding Income and the Price of the PoolVac good constant), this is due to the direct relationship between the change in quantity demanded and the change in price and the value for the related good is positive.
Regression Results Variable(Predictor) | Coefficient Estimate | Standard Error | T-ratio | P-value | P | -10.758 | 1.33 | -8.09 | 0.000 | MAVG | 0.021420 | .009452 | 2.27 | 0.034 | PH | 3.166 | 1.344 | 2.36 | 0.028 |
Since the P values of all 3 variables are within the 5% confidence interval, each variable should be considered as
PoolVac, Inc. manufactures and sells a single product called the “Sting Ray,” which is a patent-protected automatic cleaning device for swimming pools. PoolVac’s Sting Ray faces its closest competitor, Howard Industries, also selling a competing pool cleaner. Using the 26 observations report we calculated pricing and cash flows.
The General Demand equation used is
QD = a + bP + cMavg + dPh
Where a is the dependent variable, bP is the price of the PoolVac good, cMavg is the average household income, and the dPh is the price of the related good (Howard Industries). . An estimated demand equation for PoolVac is:
Qd = 2729 – 10.8P + 0.0214Mavg + 3.17Ph
Where, bP is the price of the PoolVac good, cMavg is the average household income, and the dPh is the price of the related good (Howard Industries). So, we see the good sold by PoolVac (the Automatic Swimming Pool Cleaner) is considered a normal good. We know this due to the general demand formula and the LAW OF DEMAND, for every $1 dollar increase in the price of the PoolVac good, we see the quantity demanded decreases by 10.8 units. We can also state, the Howard Industry good is a substitute good. We know this based on the values from the general demand function formula. So for every $1 dollar increase in the price of the Howard Industry good, we see the quantity demanded of the PoolVac good increases by 3.17 units (when holding Income and the Price of the PoolVac good constant), this is due to the direct relationship between the change in quantity demanded and the change in price and the value for the related good is positive.
Regression Results Variable(Predictor) | Coefficient Estimate | Standard Error | T-ratio | P-value | P | -10.758 | 1.33 | -8.09 | 0.000 | MAVG | 0.021420 | .009452 | 2.27 | 0.034 | PH | 3.166 | 1.344 | 2.36 | 0.028 |
Since the P values of all 3 variables are within the 5% confidence interval, each variable should be considered as