Spending Factors by Consumers - Assignment Example

Spending by consumers depends on various factors; age and amount of consumer disposable income determine their level of spending. The following model gives an estimation of consumer spending.

     S = k (A+ A²) + h I            (where k and h are constants, A=age, I= personal income)

Heating oil prices that affect the country periodically from October to March are caused by the demand for the product. During this period, global oil demand increased sharply (McGuigan, Foyer, Haris, 2008). The increasing demand exceeds supply leading to an increase in oil prices across the globe. The increase in demand is caused by increased industrial activities, anticipations of low supply, and high-energy demand in Europe.

The caesarian section rates have also increased steadily in the US since the mid-nineties due to the demand for the services. Improved education and changing lifestyles are making women evade their role of giving birth. This has contributed to an increase in the demand for the service increasing cost.

Coming back and disappearance of a favorite gum depend on people’s taste and preference. The variation in demand and sale determines the existence of the product.
A good model works independently of the variables. In this situation, characteristics of people such as age, economic background, and gender act as the basic variables. If more men than women are likely to buy beef jerky, then an appropriate model should constitute a nonlinear function that reduces to zero whenever the model is used for a female customer. To predict the demand for different products in the store using the demand model, store owners should consider using weighted data instead of using raw data (McGuigan, Foyer, Haris, 2008). Either of the two methods will account for differences in preference for beef jerky between men and women.

When using a first-order smoothing exponential to forecast the expected sale of the toy, the different values on the academic calendar will provide the best values. Although parents have some negative attitudes towards the new toy, the educational benefits of the toy surpass the proposed disadvantage of the toy. The educational seasons will, therefore, determine the likelihood of the parents buying the toy. A resultant model should, therefore, assign a certain weight to different months. This is because the sales of the new toy will vary according to the educational needs of the children. The sale of the new toy is expected to reach its peak during school holidays and drop drastically during school days. These variations will determine the demand for the new toy.

From the NYT article, economic predictions might be insignificant to many people but their implications affect all people. According to the NYT article, the unemployment level is expected to increase to 9.8% and this correlates with the Livingstone survey. The NYT article predicts an increase in GDP while the Livingstone survey predicts a fall in GDP. The two groups, however, express fear over a new economic recession. Although the two parties used models to predict the various economic factors, they used completely different models and data and, hence, the difference in their predictions Read More