2. Discuss the effects on supply and demand of energy bars as a result of changes in the variables such as incomes, tariffs and inflation. In your answer also make references to the concepts of aggregate demand and aggregate supply, the Philipps Curve and

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Your task:

  1. From the predictions on incomes, inflation and tariffs given above and using data in the provided EXCEL Spreadsheet data table (see section) suggest assumptions that would produce each of the following outcomes:  (A) Worst Case Scenario (B) Base or Middle Case Scenario and (C) Best Case Scenario. Justify your reasoning. Consider the information in the Excel spreadsheet given to be the Base Case Scenario. Based on the Base Case Scenario prepare Excel spreadsheets showing the following variables for the Best Case Scenario and Worst Case scenarios. In fact you should end up having have three Excel tables each containing the following variables:

Dependent Variable – Annual Demand

Independent Variables:   X1 = Average income per person

Tariff on Imports of energy bars

X3 = Number of stores

X4 = Inflation

Each Excel table should be similar in form to the one for the Base Case below but have different figures for the independent variables due to the fact that assumptions will change from case to case.

Example of Excel Table - Base Case

Annual Demand

Average Income per person

Tariff on energy bars

Number of stores

Inflation

Y

X1

X2

X3

X4

 

Remember to create Excel tables for the for the Worst Case and Best Case scenarios as well.

  1. Discuss the effects on supply and demand of energy bars as a result of changes in the variables such as incomes, tariffs and inflation. In your answer also make references to the concepts of aggregate demand and aggregate supply, the Philipps Curve and the Laffer curve. This part requires application of economic theory (both micro and macroeconomics).

 

  1. Conduct a multiple regression analysis (in log-linear form) under each of the three scenarios above i.e. Base (Middle) Case, Worst Case and Best Case scenarios. In the interpretation of the regression results discuss the impact of the different assumptions on the annual demand of Schmeckt Gut energy bars I Atolia.

 

  1. Having performed the scenario analysis make a recommendation to the Board of Directors on what it should do in order to create value for the business as it seeks to expand its market into Atolia. 

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