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As the owner of Barney’s Broilers a fast-food chain you see an increase inthe demand for broiled chicken as consumers become more health consciousand reduce their consumption of beef and fried foods

As the owner of Barney’s Broilers—a fast-food chain—you see an increase inthe demand for broiled chicken as consumers become more health consciousand reduce their consumption of beef and fried foods. As a result, you believeit is necessary to purchase another oven to meet the increased demand. Tofinance the oven you go to the bank seeking a loan. The loan officer tells youthat your revenues of $750,000 are insufficient to support additional debt. Toqualify for the loan, Barney’s Broilers’s revenue would need to be $50,000higher. In developing a strategy to generate the additional revenue, you collectdata on the price (in cents) per pound you charge customers and the relatedquantity of chicken consumed per year in pounds. This information is contained114Managerial Economics and Business StrategyA1BCDE FGSUMMARY OUTPUT23 Regression Statistics 4 Multiple R 0.765 R-Square 0.576 Adjusted R-Square 7 Standard Error 8 Observations0.4947.1325910Analysis of Variance11Degrees ofFreedom Sum of SquaresMean Square F Significance F4 60936.56 15234.14 6.86 .03Residual 20 44431.27 2221.56 Total 24 105367.84 Lower 95%12 Regression13 141516t-Statistic P-Value 17 InterceptCoefficients Standard Error136.96 43.46 3.15 0.01 50.60Upper 95%223.3218 Price of Residential Heating Fuel 91.69 29.09 3.15 0.01 149.49 33.8919 Price of Natural Gas 43.88 9.17 4.79 0.00 25.66 62.1020 Price of Electricity 11.92 8.35 1.43 0.17 28.51 4.6721 Income 0.050 0.3500 0.14 0.90 0.75 0.65in the file called Q18.xls available online at www.mhhe.com/baye7e. Usethese data and a log-linear demand specification to obtain least squares esti-mates of the demand for broiled chicken. Write an equation that summarizesthe demand for broiled chicken, and then determine the percentage priceincrease or decrease that is needed in order to boost revenues by $50,000.

Apr 30 2020 View more View Less

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