The maker of a leading brand of low-calorie microwavable food ACB estimated the following demand equation for its product using data from 26 supermarkets around the country for the month of April:
Q=5 200-42P+20Px + 5.2L + 0.20A + 0.25M
Standard deviation (Sec) for P = 17.5; Px = 6.2; L = 2.5; A = 0.09; and M = 0.21.
R2 = 0.60
n = 26
F= 4.88
Assume the following values for the independent variables:
Q = Quantity sold per month
P (in cents) = Price of the product = 500
Px (in cents) = Price of the leading competitor's product = 600
L (in dollars) Per capita income of the standard metropolitan area (SMSA) in which the supermarket
is located = 5 500
A (in dollars) = Monthly advertising expenditure = 10 000
M = Quantity of microwavable food sold in SMSA in which the supermarket is located = 5000
Required:
Determine the quantity of microwavable food that the company will sell per month.
