Lecture Managerial economics (8e): Chapter 4 - Samuelson, Marks

Chapter 4 - Estimating and forecasting demand. This chapter is organized as follows. We begin by examining sources of information that provide data for forecasts. These include consumer interviews and surveys, controlled market studies, and uncontrolled market data. Next, we explore regression analysis, a statistical method widely used in demand estimation. Finally, we consider a number of important forecasting methods.

Managerial Economics, 8e William F. Samuelson   Stephen G. Marks ●

Chapter four

Estimating and 

Forecasting Demand

 To count is a modern practice, the  ancient method was to guess; and  when numbers are guessed, they are  always magnified.

 ~Samuel Johnson

I know half the money I spend on 

advertising is wasted, but I can never  find out which half.

Estimating Movie Demand

Making movies is a risky business.

Consumer Surveys

Survey Pitfalls

New Coke

Controlled Market Studies

Uncontrolled Market Data

Ordinary Least­Squares Regression

Multiple Regression Interpreting Regression Statistics

R­Squared Adjusted R­Squared The F­Statistic

four years of 

prices and 

quantities

Interpreting Regression Statistics (cont.)

Standard Errors of the Coefficients The t­Statistic

Standard Error of the Regression

Potential Problems in Regression

Equation Specification Omitted Variables

Multicollinearity Simultaneity and Identification Other Problems

Shifts in Supply and Demand

Time­Series Models

Fitting a Simple Trend

The Effect of Today on Tomorrow

Forecasting Cable TV Subscribers

The Demand for Toys Seasonal Variation

The Components  of a Time Series

Fitting a Trend 

to a Time Series

Seasonal toy sales over Ten Years

Barometric Models

Forecasting Performance

Forecasting the Fate of Euro Disney

Forecasting Accuracy

Forecasting Performance Estimating Movie Demand Revisited 

Regression Using Spreadsheets

Simple Regression

Step 1: Enter the data.

Step 2: Call up the regression program.

Step 3: Designate the columns of data to be  used in the regression.

Step 4: Inform the program where you want  the output.

Step 5: Run the regression.

Regression Data

Regression Data

Simple regression results

Multiple regression results