Question:
You are the manager of a large automobile dealership who wants to learn more about the effectiveness of various discounts offered to customers over the past 14 months. Following are the average negotiated prices for each month and quantities sold of a basic model (adjusted for various options) over this period of time.
a. Graph this information on a scatter plot. Estimate teh demand equation. what do the regression results indicate about the desirability of discounting the price? Explain
| Month |
Price |
Quantity |
| January |
12500 |
15 |
| February |
12200 |
17 |
| March |
11900 |
16 |
| April |
12000 |
18 |
| May |
11800 |
20 |
| June |
12500 |
18 |
| July |
11700 |
22 |
| August |
12100 |
15 |
| September |
11400 |
22 |
| October |
11400 |
25 |
| November |
11200 |
24 |
| December |
11000 |
30 |
| January |
10800 |
25 |
| February |
10000 |
28 |
b. what other factors besides price might be included in this equation? Do you foresee any difficulty in obtaining these additional data or incorporating them in the regression analysis?