A. Assume that as a business manager, you have recently made good use of a variety of tools like Expert Opinion, Consumer Surveys, Test Marketing & Price Experiments, and Census & Other Historical Data to help determine the demand for a new product your firm recently placed on the market. All of the tools were used properly, the information gathered was accurate and honest, and the basic limitations of such tools were also taken into consideration. Everything pointed to a successful product launch,...but it's been on the market for a few months, and the demand is exceedingly poor/disastrous. As a result, the product will be pulled from the market within a week and no more will be produced in order to cut the firm's losses.
1. What basic reality of economics and business should you learn from this experience to make you a wiser business manager?
2. What does this tell you about the use of those tools that were implemented, and why did their "predictions" end up being completely wrong despite the tools being used properly, etc.?
B. Assume you are a business manager that's considering the use of multiple regression analysis to gather data about what impacts consumer demand.
1. What must you do to make sure this tool is implemented wisely so it will provide useful information?
2. What specific kind of data does multiple regression analysis provide, and what makes such data change?
3. What is a basic time limitation of multiple regression analysis, and why is there such a limitation?