Aggregate demand:

The aggregate demand is the synopsis of the individual demand in the market (Daniel Rexhausen), the work of the company highly based on the aggregate supply and demand. The company Schemeckt Gut has to consider the aggregate demand of Atollia. It is important for the company to spend time and money before the process of production in order to determine the Atollia’s aggregate demand. In order to know more about the Atollia’saggregatedemand,the company should go for the primary data and to choose the appropriate sample in case of large population size.

Aggregate supply:

The aggregate supply is the summation of the supply of the homogenous or same product or which are same in nature from the companies as a whole. The market share of the company is decided by the aggregate supply which ultimately makes margin and loss for the company. Schemeckt Gut should analyze the aggregate supply, by analyzing it the company would better evaluate the market share required for the company.

Regression analysis:

The summary of the regression analysis is given below;

Regression Statistics
Multiple R 0.955932682
R Square 0.913807292
Adjusted R Square 0.898596814
Standard Error 7.81913539
Observations 21

 

In the statistical or regression analysis, it is to assume that the tariff is explanatory variable and income is the dependent variable. The adjusted R square in the regression analysis is 0.898596814 which is not appropriate and up to the market, so the company would most likely go for a change. Analyzing interest coefficient is the number of stores and it is 4.07244, the number is significant and positive statistically. The coefficient value shows that the impact on demand is positive.

In summarizing the regression analysis, it has been analyzed that the average income of the individual has a P Value of 0.0167 which indicates a positive hypothesis that the average income plays a key role in the demand of the Energy bars, this is a positive hypothesis in the 95% plus or minus segments.

 

Problem B

Impact of tariff:

The increase in the tariff rate argues that the company should sell product more than the original purchase cost, due to this the customer level of the company would be reduced because customers are most probably buying premium and exceptional quality product at minimum price. Generally, thedecrease in the tariff does not allow manufacturers to cease the production as the demand in the market is significantly less. This, in turn would result in unemployment because people would lose their jobs.

Unfortunately, the rate of tariff implies negative impact on the product’s demand. The coefficient of tariff rate in the analysis is -6.46 which signifies that if the tariff rate is increased by 1 unit, the demand of the product would be decreased by 6.46 units. Thus, demand for energy can be raised through reducing tariff rate.

 

 

 

            Problem C

Benefits of free trade:

Ignoring the tariff barrier, two countries primarily engaged in importing and exporting, it enables lower prices for the customers, increase exports, benefits from greater choice of good and economies of scale…………………

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