SUNY MGE 302 - Border Snacks Inc. produces and sells
Question # 00414878
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Updated on: 10/27/2016 08:31 AM Due on: 10/27/2016
1. Border Snacks Inc. produces and sells picante sauce, nacho chips, and queso dip. The company’s
marketing department estimated a linear demand function for Border’s picante sauce: QP a bPP cM dPN ePQ
where
sauce, QP
PN is the number of jars of picante sauce sold per month,
is the price of a bag of nacho chips, PQ PP is the price of picante is the price of a jar of queso dip, and M is consumer income. In the market served by Border Snacks, income is currently $16,000. The
following regression results were obtained using 22 monthly observations: DEPENDENT VARIABLE: QP R-SQUARE F-RATIO P-VALUE ON F 22 0.9160 46.35 0.0001 PARAMETER STANDARD VARIABLE ESTIMATE ERROR T-RATIO P-VALUE INTERCEPT 900.0 245.3 3.67 0.0019 PP –18.00 5.22 –3.45 0.0031 M 0.015 0.0036 4.21 0.0006 PN –88.6 32.5 –2.73 0.0144 PQ 12.0 3.95 3.04 0.0074 OBSERVATIONS: a.
b. 2.
Are picante sauce and nacho chips complements or substitutes?
Are picante sauce and queso dip complements or substitutes?
c. If Border Snacks Inc. sets the price of picante at $6 per jar, the price of its nacho chips at $3 per
bag, and the price of its queso dip at $8 per jar, calculate the sales forecast for number of
picante sauce jars sold. d. If the price of nacho chips falls by 2.4%, by what percentage can Border Sales expect picante
sauce sales to increase or decrease?
marketing department estimated a linear demand function for Border’s picante sauce: QP a bPP cM dPN ePQ
where
sauce, QP
PN is the number of jars of picante sauce sold per month,
is the price of a bag of nacho chips, PQ PP is the price of picante is the price of a jar of queso dip, and M is consumer income. In the market served by Border Snacks, income is currently $16,000. The
following regression results were obtained using 22 monthly observations: DEPENDENT VARIABLE: QP R-SQUARE F-RATIO P-VALUE ON F 22 0.9160 46.35 0.0001 PARAMETER STANDARD VARIABLE ESTIMATE ERROR T-RATIO P-VALUE INTERCEPT 900.0 245.3 3.67 0.0019 PP –18.00 5.22 –3.45 0.0031 M 0.015 0.0036 4.21 0.0006 PN –88.6 32.5 –2.73 0.0144 PQ 12.0 3.95 3.04 0.0074 OBSERVATIONS: a.
b. 2.
Are picante sauce and nacho chips complements or substitutes?
Are picante sauce and queso dip complements or substitutes?
c. If Border Snacks Inc. sets the price of picante at $6 per jar, the price of its nacho chips at $3 per
bag, and the price of its queso dip at $8 per jar, calculate the sales forecast for number of
picante sauce jars sold. d. If the price of nacho chips falls by 2.4%, by what percentage can Border Sales expect picante
sauce sales to increase or decrease?
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Rating:
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Solution: SUNY MGE 302 - Border Snacks Inc. produces and sells