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Assignment 1: Making Decisions Based on Demand and Forecasting
Assignment 1 Demand Estimation
ECO 550 Managerial Economics and Globalization
Strayer University
Assignment 1: Making Decisions Based on Demand and Forecasting

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Assignment 1: Making Decisions Based on Demand and Forecasting
1. Using Excel or other calculation software, input the data you collected in criterion one to calculate
an estimated regression. Then, from the calculation provided, interpret the coefficient of
determination, indicating how it will influence your decision to open the pizza business. Explain any
additional variables that may improve the coefficient of determination.
When we analyze the independent variable as pizza price and pizza sale (dependent
variable), so we are getting:
Table 1.1
Price per pizza ($) P | sales per day (quantity) Y | promotional expenditures per day ($) A |
disposable income (M) ($) M |
5.99 | 90 | 130 | 37.5 |
6.99 | 80 | 120 | 38.5 |
7.99 | 70 | 110 | 39.5 |
8.99 | 60 | 100 | 40.5 |
9.99 | 50 | 90 | 41.5 |
A linear demand model would be specified as follows:
Q=a+B1A+B2P+B3M+e
But for our case we will take a simple linear regression model, so we will limited the section to the
simplest case of one independent and one dependent variable, where the form of the relationship
between the two variables is linear:
Y=a+bX
So instead of X we put the data from the table: P, M, A.

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