A local Birmingham-area restaurant chain introduced a new summer menu in its Vestavia Hills location, but...

A local Birmingham-area restaurant chain introduced a new summer menu in its Vestavia Hills location, but not its Mountain Brook location. Nightly revenue averaged $8,000 in Vestavia Hills and $7,000 in Mountain Brook before the menu change, but $9,500 in Vestavia Hills and $8,000 in Mountain Brook after the menu change.

a. The difference-in-difference estimate of the increase in average nightly revenue attributable to the menu change is

b. In the previous question, the increase in average nightly revenue attributable to summer, rather than the menu change, is

Solutions

Expert Solution

Birmingham area restaurant introduced a new summer menu in Vestavia and not at Mountain Brook location.

Vestavia revenue averaged $8,000 and Mountain Brook revenue averaged $7,000 before the menu change.

Vestavia revenue averaged $9,500 and Mountain Brook revenue averaged $8,000 after the menu change.

a. Thus the difference in difference estimate of the increase in average nightly revenue attributable to menu change is $500 as Vestavia's revenue increased by $500 more than that of Mountain Brook.

It is also defined as the difference in average outcome in treatment group which is Vestavia before and after the meny change minus the difference in average outcome in Mountain Brook location which is the control group before and after the introduction of the menu change.

Thus (9500 - 8000 ) - ( 8000 - 7000 ) = 1,500 - 1,000 = $500

b. On the other hand, the increase in average nightly revenue attributable to summer, is $1,000 as Mountain Brook's revenue also increased by $1000 without the change in menu change, thus the $1,000 increase in both the locations is attributable to summer.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

A local Birmingham-area restaurant chain introduced a new summer menu in its Vestavia Hills location, but...

A local Birmingham-area restaurant chain introduced a new summer menu in its Vestavia Hills location, but not its Mountain Brook location. Nightly revenue averaged $6,000 in Vestavia Hills and $4,000 in Mountain Brook before the menu change, but $7,000 in Vestavia Hills and $3,000 in Mountain Brook after the menu change. The difference-in-difference estimate of the increase in average nightly revenue attributable to the menu change is a.$4,000 b. $0 c.$1,000 d.$2,000.

A fast food chain plans to add a new item to its menu. There are three...

A fast food chain plans to add a new item to its menu. There are three possible campaigns for the new menu item. They introduced the product at locations in several randomly selected markets. A different promotion was used at each location, and the weekly sales of the new item are recorded for the first four weeks. Management is interested in determining the differences in the promotion campaigns with regard to total sales. In addition, it wants to know if...

The Waco Twin Peaks restaurant was a franchised location of the Twin Peaks chain of sixtyseven...

The Waco Twin Peaks restaurant was a franchised location of the Twin Peaks chain of sixtyseven sports bar-style restaurants with log cabin décor based in Dallas, Texas. Similar to Hooters restaurants, the concept featured “scantily clad waitresses toting beer in frosted glasses” (Smith, 2015). 1. Diagram the channel(s) structure for the Twin Peaks chain of restaurants. Identify all the types and examples of relevant channel members in your diagram. Be as comprehensive and specific as possible in your design.

JAVA Point of Sale System The McDowell Restaurant chain has asked you to write a menu...

JAVA Point of Sale System The McDowell Restaurant chain has asked you to write a menu program for their new Fast-food service machines. Your program already prints the following menu like this: ********************************************************************** McDowell’s Restaurant ********************************************************************** Make your selection from the menu below: 1. Regular Hamburger $1.50 2. Regular Cheeseburger $1.75 3. Fish Sandwich $2.50 4. Half-pounder with cheese $2.75 5. French Fries $0.99 6. Large Soft Drink $1.25 *********************************************************************** Select 1, 2, 3, 4, 5, or 6 ----- >...

Suppose you own a local restaurant chain that sells through brick & mortar locations and also...

Suppose you own a local restaurant chain that sells through brick & mortar locations and also offers take-out and characterized by the following demand and supply curves Qd = 3,0000,000 – 600P + 200M Qs = 1,000,000 + 400P Assume M=15,000. Find the market price and quantity for your firm. Assume COVID hits and since consumers are reluctant to leave their homes and dine-in but still buy take-out, the demand changes to Qd = 2,000,000 – 600P + 200M; M=15,000...

Choose a fast-food restaurant chain that does business in your area. Describe the company's target market...

Choose a fast-food restaurant chain that does business in your area. Describe the company's target market and explain how its marketing mix is designed to appeal to this target market.

An article in the New York Times describes Chipotle as "the restaurant chain that has come...

An article in the New York Times describes Chipotle as "the restaurant chain that has come to symbolize the tastes of the millennial generation" and lists the sources of Chipotle's success as including the restaurant's allowing "their customers to tailor their meals, and still have them ready in a flash... playing to consumer tastes for customization, speed and ingredients from sources that adhere to animal welfare, organic and other standards." Prepare a document that answer this question. Are these attributes...

Question 2 Rebel Restaurant Pte Ltd (“RR”) is looking for a new location in shopping malls....

Question 2 Rebel Restaurant Pte Ltd (“RR”) is looking for a new location in shopping malls. RR is considering purchasing a shop rather than leasing, as it has done in the past. Three retail shops in a new mall are available. Each shop has its own advantages and disadvantages. The owner of RR has completed an analysis of each shop that factors in the time value of money. RR expects to pay a tax rate of 40% for the next...

A restaurant chain is measuring the levels of arsenic in chicken from its suppliers. The question...

A restaurant chain is measuring the levels of arsenic in chicken from its suppliers. The question is whether there is evidence that the mean level of arsenic is greater than 80 ppb. The levels of arsenic (in ppb) are: 68,75,81,93,95,134 What is the sample mean for the data? Use the appropriate notation. 2. Write the null and alternative hypothesis. 3. Describe the meaning of the parameter used in Part (2) 4. Translate the original sample data by the appropriate...

Sampling Distribution of Proportions A restaurant chain regularly surveys its customers. On the basis of these...

Sampling Distribution of Proportions A restaurant chain regularly surveys its customers. On the basis of these surveys, the management of the chain claims that 75% of its customers rate the food as excellent. A consumer testing service wants to examine this claim. They take a simple random sample of 600 customers and ask them each to rate the food. Assume that the restaurant chain’s claim is true (i.e. that the true proportion is indeed 0.75). a) assuming that the chain’s...

Subjects