Question

I need my answer from question 3 to be confirmed and question 4 to be answered. I am only providing question 3 as it is necessary context.

The table below shows the average sales (as number sold per day) at grocery store of Product A based on its prices and the prices of a competitor’s Product B, where the two competing products and their respective prices are displayed next to each other, S=S(A,B).

	A = $2.75	A = $3.00	A = $3.25	A = $3.50	A = $3.75
B = $2.90	107	93	73	48	15
B = $3.15	156	142	122	97	64
B = $3.40	205	191	171	146	113
B = $3.65	254	240	220	195	162
B = $3.90	303	289	269	244	211

Problem 3 question

- In order to estimate the average sales of Product A when the price of Product A is $2.75 and the price of Product B is $3.90, which variable should be held constant? Why?

Problem 3 answer

- To estimate the average of sales we need to treat the price of A as a constant and observe that production is affected by which other variables. Here production is also affected by price of B so price of A should be held constant.

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Problem 4 question (the question I need to be answered)

- Will the cross-section needed to estimate the average sales in problem 3) be represented by a row or column? Why?

Answer 1

Solution of problem 4:-

Price of A and B both is varying. So the cross section is needed to estimate the average sales of product A in problem 3. It can be represented by a column or a row by keeping the row elements constant or vice versa.This depends up on what parameter we are keeping as a constant.