Economics/ Demand Estimation
MANGERIAL ECONOMICS
Assignment
Demand Estimation
04-Dec-12
Liaqat Group
Submitted To: Prof. Babar Hussain
What Is Demand Estimation?
When running a small business, it is important to have an idea of what you should expect in the way of sales. To estimate how many sales a company will make, demand estimation is a process that is commonly used. With demand estimation, a company can gauge how much to produce and make other important decisions.
Definition:
Demand estimation is a process that involves coming up with an estimate of the amount of demand for a product or service. The estimate of demand is typically confined to a particular period of time, such as a month, quarter or year. While this is definitely not a way to predict the future for your business, it can be used to come up with fairly accurate estimates if the assumptions made are correct.
Methods of Demand Estimation: There are a variety of ways that can be used to estimate demand, each of which has certain advantages and disadvantages. They are divided into Qualitative and Quantitative Methods.
Qualitative Methods: Qualitative methods consists of following points.
Consumer surveys:
Firms can obtain information regarding their demand functions by using interviews and questionnaires, asking questions about buying habits, motives and intentions. These can be quick on-the-street interviews, or in-depth ones. They might ask, for example, how much more petrol respondents would buy if its price were reduced by Rs.15 per liter, or which brand of several possibilities they prefer. These methods have certain drawbacks.
Market experiments:
As with consumer surveys these can be performed in many ways. Laboratory experiments or consumer clinics seek to test consumer reactionsto changes invariables in the demand function in a controlled environment.Consumers are normally given small amounts of money and allowed to choose how to spend this on
Assignment
Demand Estimation
04-Dec-12
Liaqat Group
Submitted To: Prof. Babar Hussain
What Is Demand Estimation?
When running a small business, it is important to have an idea of what you should expect in the way of sales. To estimate how many sales a company will make, demand estimation is a process that is commonly used. With demand estimation, a company can gauge how much to produce and make other important decisions.
Definition:
Demand estimation is a process that involves coming up with an estimate of the amount of demand for a product or service. The estimate of demand is typically confined to a particular period of time, such as a month, quarter or year. While this is definitely not a way to predict the future for your business, it can be used to come up with fairly accurate estimates if the assumptions made are correct.
Methods of Demand Estimation: There are a variety of ways that can be used to estimate demand, each of which has certain advantages and disadvantages. They are divided into Qualitative and Quantitative Methods.
Qualitative Methods: Qualitative methods consists of following points.
Consumer surveys:
Firms can obtain information regarding their demand functions by using interviews and questionnaires, asking questions about buying habits, motives and intentions. These can be quick on-the-street interviews, or in-depth ones. They might ask, for example, how much more petrol respondents would buy if its price were reduced by Rs.15 per liter, or which brand of several possibilities they prefer. These methods have certain drawbacks.
Market experiments:
As with consumer surveys these can be performed in many ways. Laboratory experiments or consumer clinics seek to test consumer reactionsto changes invariables in the demand function in a controlled environment.Consumers are normally given small amounts of money and allowed to choose how to spend this on