: Demand EstimationA. Market Characteristics and Demand Estimation The price and quantity data provided in the dataset is a reasonable approximation for estimating product demand. However, we assume that other dependent variables, such as advertising and substitutes, do not influence the demand schedule. The market structure is monopolistic where many competing manufacturers/retailers sell differentiated products/services from each other. In monopolistic competition, firms behave like monopolies in the short run. Some of the characteristics of the retail industry in which Wal-Mart operates are as follows.1. The monopoly market has many producers and consumers but no single market leader to influence the market price2. Consumers choose manufacturers based on branding and advertising.3. Producers still influence the market price with relatively lower entry and exit barriers.B. Linear vs. Log-Linear Demand Curve The linear demand curve assumes that price changes, prices of complementary/supplemental goods, income, advertising, and related factors will lead to a constant marginal effect. We assume a linear demand curve within the specified data range. Since we assume that the effect of unit change in the independent variable will lead to a constant effect on demand in the linear demand correction analysis. So the change in elasticity is the basic assumption under a linear demand curve. In the log-linear demand curve we assume that there will be variable changes in demand due to the unit change in the independent variable (price), but the elasticity of demand is assumed to be constant. Constant elasticity is the basic assumption of a linear logarithmic demand curve.Part 2: Regression AnalysisSummary Table: Linear Demand CurveRegression Stat......middle of paper......s and Statistics, 59 (3), 355 -359.Christ, Carl F. (1985). First advances in estimating quantitative economic relationships in America. American Economic Review, 75 (6), 39-52. Eales, James S., & Unnevehr, Laurian J. (1988). Demand for beef and chicken products: separability and structural change. American Journal of Agricultural Economics, 71 (3),521-532.Farnham, Paul G. (2005). Economics for managers. Sella Superiore River. NJ: Pearson Education, Inc. Ferger, Wirth F. (1932). The static and the dynamic in statistical demand curves. QuarterlyJournal of Economics, 47 (1), 36-62.Hirschey, Mark. (2006). Managerial economics. Stamford CT: Thomson Higher Ed.McGuigan, James R., Moyer, R. Charles and Harris, Frederick H.deB. (2005). Managerial economics: applications, strategies and tactics with economic applications. Stamford CT: Thomson Higher Ed.