Managerial Economics and Strategy, 2/e

3 Empirical Methods for Demand Analysis

98% of all statistics are made up.

Learning Objectives

1. Define and calculate elasticities.

2. Estimate demand functions using regression analysis.

3. Know how to evaluate the reliability of regression analyses.

4. Use regression methods to forecast.

Managerial Problem Estimating the Effect of an iTunes Price Change

From the time Apple launched iTunes in mid-2003 through early 2009, it charged 99¢ for each song on its U.S. site. In early 2009 Apple reconsidered its pricing strategy. Music producers wanted Apple to charge more, but price competition from rivals such as Amazon created pressure on Apple to lower its price. In April 2009, Apple changed to a new U.S. pricing scheme: 69¢ a song for the older catalog, ...