It Is Believed That the Sales Volume of One-Liter Pepsi

question 66

Short Answer

It is believed that the sales volume of one-liter Pepsi bottles depends on the price of the bottle and the price of a one-liter bottle of Coca-Cola. The following data have been collected for a certain sales region. The linear model Pepsi Sales = β₀ + β₁Pepsi Price + β₂Cola Price + ε and the log-log model ln(Pepsi Sales) = β₀ + β₁ln(Pepsi Price) + β₂ln(Cola Price) + ε have been estimated as follows: Using the log-log model, calculate the predicted Pepsi Sales when the Pepsi Price is $1.50 and the Cola Price is $1.25.

---

Definitions:

Highly Profitable

Highly profitable describes businesses or investments that generate earnings significantly above the average for their sector or the market as a whole.

Rapid Sales Growth

A significant increase in the volume of sales over a short period, indicating business expansion.

Competitive Retail

The marketplace scenario where various retailers compete with each other to offer goods or services to consumers, often leading to better prices and quality.

Elastic Demand

Describes a market situation where the demand for a product or service significantly changes in response to a change in price.