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Love season - Assignment Example

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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 increase sharply (McGuigan, Foyer, Haris, 2008). The increasing demand exceed supply leading to an increase in oil…
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Love season
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ECON 6000 ASSIGNMENT #2 Spending by consumers depends on various factors; age and amount of consumer’s disposable income determine their level of spending. The following model gives an estimation of consumers spending.
S = k (A+ A²) + h I (where k and h are constants, A=age, I= personal income)
2. 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 increase sharply (McGuigan, Foyer, Haris, 2008). The increasing demand exceed supply leading to an increase in oil prices across the globe. 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 mid-nineties due to the demand of the services. Improved education and changing lifestyles are making women to evade their role of giving birth. This has contributed to an increase in the demand for the service resulting to an increase in cost.
Coming back and disappearance of a favorite gum depend on people’s taste and preference. The variation of demand and sale determines the existence of the product.
3. A good model works independent of the variables. In this situation, characteristic 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, the 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.
4. When using a first order smoothing exponential to forecast the expected sale of the toy, the difference values on 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 to buy 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 of the new toy.
5. From the NYT article, economic predictions might be insignificant to many people but their implications affect all people. According to the NYT article, unemployment level is expected to increase to 9.8% and this correlates with Livingstone survey. The NYT article predicts an increase in GDP while 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.
Reference
McGuigan, J. R. Foyer, R. Haris, F. H. (2008). Managerial economics: Application, Strategy and Tactics. Boulevard: Cengage. Read More
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