Discuss Bayou Beignet’s operates food trucks in several U.S. cities, selling just two products: mini beignet’s (New Orlean’s style pastries) suitable for eating on the go, and high-quality, New Orlean’s style brewed coffee (with chicory).

by

Bayou
Beignet’s operates food trucks in several U.S. cities, selling just two
products: mini beignet’s (New Orlean’s style pastries) suitable for eating on
the go, and high-quality, New Orlean’s style brewed coffee (with chicory). The
simplicity and uniqueness of their offerings have allowed them to develop
significant brand awareness in a relatively short period of time (despite
spending no money on marketing), and the limited ingredients in their products
have allowed them to keep costs very low and have virtually no customer wait
times. They currently operate a truck in 30 U.S. cities. Since they expanded quickly, all of these
trucks have been in operation about the same amount of time.
They
approached you a couple months ago seeking insight into their pricing of each
of their products affects their sales. At the time, the company had uniform
pricing of their products across all locations. You convinced them to carry out
a randomized experiment, lowering their prices for each product by varying
amounts in some cities, raising their prices in others, and keeping the prices
the same in a few cities. After allowing customers to adjust to the new prices,
the company has provided you with data on the last month’s sales of each
product in each location. You have additionally collected data on the average
household income in the metropolitan area for each location.
The
available data can be found in the excel file, “Bayou_data.xlsx”. [Make sure to use the data in the spreadsheet provided in your
folder for this assignment!] Your goal is
to carry out a multiple regression analysis of the data (using Excel), with
particular focus on estimating the price elasticities of demand for both the
firm’s products. You will be led through this analysis below. Please carry out
the following steps and answer the associated questions. You will not submit this document, but instead submit your
answers and graphs/regressions using the “Demand Estimation Assignment Answer
Sheet”.






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