Question

Explain Demand Estimation and Forecasting with Excel with regard to economics. Give examples as necessary.

Why do you need to implement Price Discrimination Schemes? Looking for some original content.

Answer 1

In demand estimation , the organizer aims to measure the quantity of relationship among the demand level and the variables corresponding to it. Pricing strategy of the firm is designed using this estimation. Here, the manager studies about the future consequences of future change in price of the demanded product.

* over estimation results in high prices with no sales

* under estimation results in low prices with less profits.

Forecasting in general refers to knowing or measuring the status or nature of an event or a variable before it occurs.

demand forecasting is the art and science of predicting the probable demand for a product or a service at some future date on the basis of certain past behavior of some related events and the prevailing trends in the present.

We should note that demand forecasting is not a usual guessing criteria rather it refers to demand estimation in an objective and scientific manner on the basis of certain events and fact relevant to forecasting.

price discrimination is the practice of charging different prices for different customers based on differences in demand and not on differences in marginal costs.

Eg: Tourists pay higher prices, because they have less elastic demand.

* locals are more aware of lower priced substitutes, so this makes their demand more elastic.

Eg: There are also discount for children and a premium for the usage of video cameras in some organizations.

* families with children have more elastic demand due to less disposible income.

* customers who use video cameras have higher income and less elastic demands.

So while considering each day to day price discrimination scenarios, each of the cases has its own valuable reason for it.

Thanks!..