Replay-Rejoice-Relive

MICROECONOMICS PROJECT (Final Report)

Group – 10 (Section - B)
Group Members,
Harish Kumar K O – P181B19
Ramya Krishnan – P181B34
Rohit Kumar Singh – P181B39
Sajan Verma – P181B41
Vipul Tak – P181B55
 Table of Contents

Sl. No.: Content: Page:

1 Introduction & Product Description 3

2 Roles of team members 3

3 Promotions 4

4 Competitors 4

5 Demand determinants & Function & Equation 5

6 Survey 5

7 Demand estimation 9

8 Cost incurred 11

9 Activities (Information of day to day 11

happening)

10 Cost analysis 16

11 Revenue analysis 19

12 Break even analysis 21

13 Elasticity analysis 22

14 Law of Diminishing marginal utility 23

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15 Cross price elasticity 24

16 Future sales forecast 24

17 Key takeaways 25

Page 2
Introduction

As a part of micro economics project, we decided to set up a stall for games in our institution. Our
aim was to offer the students of our college a chance to relive their childhood memories.
Incorporating a stall of the most played games during melas was our action plan.

Product Description

Our product is target game, which is an activity in which players try to hit a target while avoiding
any obstacles. We designed 2 variants under target game, both the variant had the same format
while the apparatus used to conduct those games was different.

Role of Team Members

1. Finance and Analytics – Vipul Tak

Estimated the budget for the business by analysing the demand for the product in the
market. Divided the capital to purchase the gifts, to invest as variable cost, to invest as
fixed cost and kept a certain amount as liquidity. Recorded every transaction to keep
the track of cost and revenue for our business.
Collected the data to estimate demand and all other important things for the business
by conducting the survey. Analysed all other factors which could affect the demand of
the product.

2. Operations and Logistics – Rohit Kumar and Harish Kumar

Before sourcing materials, we had planned the location and materials required. Location
was decided as Amphitheatre and Cafeteria based on our survey results. Permission to
conduct events at these locations was sought from the Estate Manager. We had sourced
materials for the games primarily from two locations. We sourced chocolates and other
eatables from Bilaspur. The rewards and equipment for the games were sourced from
Tauru. Since we had to borrow a car, we also had to incur some fuel expenses
(transportation cost).

3. Marketing and Strategy – Sajan Verma and Ramya Krishnan

Marketing for the event was primarily done through e-mails and WhatsApp messages.
Since our rewards for the winners focused on gifts which the consumers will be able to
relate to and invoke nostalgia. We made special poster using a gif of the rewards and
circulated it through email and WhatsApp. Whenever a winner was declared, we would
send pictures of the winners receiving their rewards on WhatsApp to honour the
winners and generate excitement. We initially started only with accepting cash payments.

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 However after sensing that many customers preferred Paytm and Tez, we started
accepting money via these platforms.

Promotions

Considering our market size and resources we decided to promote our product through Social
Media as well as by making people understand about our product.
For social media means we used “What’s App” as our primary mean, we posted updates about
our product and rewards in our batch group and we also texted our seniors regarding the same.
We sent “mail” through G-mail to every batch, which contained details about the product,
timings and place. Stories were also posted containing pictures of winners on “Instagram” and
“Snapchat” to attract the customers.

Competitors

The following were the competitors that we observed for our game:
1. Play Station
2. Roll
3. Bhel-puri
4. Pani-puri
5. Oreo Shake

Demand Determinants

As we went on with our business of conducting the games, we observed that there were a few
parameters that critically determined the demand for the games. The parameters were as given
below:
1. Price for a trial of games (P)
2. Availability of games (A)
3. Substitute for our stall (Ps)
4. Time of conducting the game (t)
5. Type of apparatus used (Ta)

Demand Function
Q= f (P, A, Ps, t, Ta)

Demand Equation
Q= a + (b*P) + (c*A) + (d*Ps) + (e*t) + (f* Ta)

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Survey

We conducted survey to decide the price, place, preferred timing and all other things in two
stages:
1. Within the group members
2. Within the institution

1. The questionnaire and responses for the same amongst the group members are provided
below:

Questionnaire:
1) Would you like to relive your childhood?
Options:
a) Yes
b) No
2) The extend of boredom that you experience during the weekends?
Options:
From a scale of 1 to 5 (1 being the lowest and 5 being the highest)
3) How available are you during weekdays?
Options:
From a scale of 1 to 5 (1 being the lowest and 5 being the highest)
4) Which is the preferred timing for leisure activities during week days?
Options:
a) 5pm - 7pm
b) 6pm – 8pm
c) 7pm - 9pm
d) 8pm – 10pm
e) 10pm - 12pm
5) Which is your favourite place to kill boredom?
Options:
a) Amphitheatre
b) Sports room
c) In front of Canteen
d) In front of Hostel
6) How much are you willing to spend to relive your childhood?
Options:
a) 15
b) 20
c) 25
d) NA

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7) What do you value the most in a game?
Options:
a) Fun with friends
b) Self-enjoyment
c) Competition
d) Reward
8) Which part of childhood do you miss the most?
a) Watching the cartoons
b) Attending melas/fairs
c) Playing indoor games
d) Playing outdoor games

Answers:
Question Answers by Respondents:
No.:
1  100% of the respondents choose option: a i.e. “YES”
2  40% of the respondents chose 3 on the scale. i.e. moderate excitement.
 40% of the respondents chose 2 on the scale. i.e. below moderate
excitement
 20% of the respondents chose 1 on the scale i.e. the lowest scale
3  80% of the respondents chose 2 on the scale in terms of their availability
 The rest 20% chose 3 on the scale
4  40% of the respondents chose 6pm to 8pm as their preferred timing for the
leisure activities
 20% of the respondents chose 7pm to 9pm, 8pm to 10pm, and 10pm to
12am each
5  40% of the respondents chose sports room as their favourite place to kill the
boredom
 20% chose in front of canteen, amphitheatre, and in front of hostel each as
their favourite places
6  40% of the respondents said they were willing to spend Rs.15 to relive their
childhood days
 40% said they were willing to spend Rs 20
 The rest gave NA as their response to this question
7  40% of the respondents said that they valued competition the most in the
game
 40% said they valued self-enjoyment in a game the most
 The rest 20% said they valued fun with friends the most in a game
8  60% of the respondents said watching cartoons was what they missed the
most in their childhood

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  The remaining 40% said playing outdoor games was what they missed in
their childhood

2. The responses which we received from the students are shown below in form of charts:

2% 8%
19% Jaguars
yes
aztecs
no
79% ninjas
92%

cartoons
5-7pm
melas 12%
31% 29% 6-8pm

54% 7-9pm
playing 38%
6% 8% 8-10pm
9% indoor games
13%
outdoor 10-12pm
games

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 amphi
12%
6% 15
8%
sports
46% 20
50% 25
infront of
36% canteen 42% NA
infront of
hostel

7% 1
8% fun with friends 13%
13% 33% 2
self enjoyment
10% 3
competition
69% 20%
reward 4
5
27%

After conducting the survey, we saw differences and similarities in the responses of group
members as compared to surveyed people:
 While in our group’s data 100% people showed interest, in the survey data we found out
there are certain people in market who are not interested In the service.
 When we asked about the availability of students during weekdays we got to know they
have less time to invest in the activity during week days.
 Both the team members and the student of institution chose 6-8 pm as their preferred
timing mainly because classes get over during this slot of time.
 People were interested in spending less than 20 Rs. to enjoy the activity.
 We saw a major difference when it comes to the place, people of our group chose sports
room as their preferred place while on the other hand students selected amphitheatre as
their preferred location.

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Decisions Made After Conducting the Survey
 We decided to set up our stall in amphitheatre and in front of canteen.
 We chose 6-8 pm as our preferred timing for the activity, but on certain days we
conducted our activity during dinner time keeping the factor in mind that people will visit
the cafeteria and it will help us to earn more revenue.
 We decided to keep our prices below 15, 20 and 25Rs.
 We kept the activity during weekends and when we saw a less demand we decided to
shift to weekdays.
 We saw that people also showed interest in cartoons, so we brought some gifts based on
their cartoon characters to build their interest in the activity.
 To attract the greater number of customers we decided to distribute a candy each to every
customer on their visit to our stall.

Demand Estimation (Regression Analysis)

In this project, we carried out surveys amongst the students of this college, to know how many
people preferred playing the games at the following price points:
 15
 20
 25

Regression from survey data

Expected demand
No of game Q-
Price(P) for no of game P-P' (P-P')(Q-Q') (P-P')^2
sessions(Q) Q'
sessions
15 22 24 -5 6 -30 25
20 20 16 0 4 0 0
-
25 6 8 5 10 -50 25
20 16 -80 50

𝑝 = 20
𝑞 = 16
After solving the equations, we arrived at the following values:
 a = 48
 b = -1.6
The equation for the estimated demand curve:
Q = 48 – (1.6 * P)

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The graphs were plotted as per the estimated data using regression analysis and the data that we
obtained from the survey. The following graph was obtained:

REGRESSION ANALYSIS
No of game sessions(y) Expected demand for no of game sessions
30

25

20

15

10

0
0 5 10 15 20 25 30
No. of game sessions

Now let us estimate demand by using regression formula.

Let us check the demand at price = 30 ,
Solving the equation, we get Q = 3
Thus, we can see that this follows the law of demand where demand is decreased with
increase in price.

Price Elasticity Of Demand(Estimated Demand)

Formula: % Change In Quantity Demanded

% Change In Price

% %
Change Change
In In
Price Quantity Price Quantity Elasticity
15 22
20 20 33% -9% -0.2727
25 6 25% -70% -2.8000

Based on the survey we calculated the price elasticity of demand for our product to see the effect
of price on the estimated demand of the product. After calculating the elasticity, we observed the
above mention points:

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1. If we change price from 15 to 20 the change in demand is not as much as we expected, there
was a lesser decrease in demand in comparison to price which means that the price elasticity of
demand was less that unit elastic(<1) for this price range and from this we can assume that if
we increase our price from 15 to 20 demand for our product will only get affected by little
margin. Changing the price can be a positive choice in this price range to gain more profit.

2. We observed that changing price to 25 will decrease the demand for our product with a greater
margin and elasticity for this price point is more than unit elastic(>1) which means that with a
slighter change in our price we will face a bigger decrease in the demand for our business. So,
while changing the prices we will need to keep this factor in our mind.

Cost Incurred

Fixed Cost
Item Cost
Gun 260
Petrol 200
Ball 180

Activities
Day 1
The apparatus used for target game:
 Balls = 3 Qty.
 Glasses = 10 Qty.

After demand estimation, we expected to conduct 24 gaming sessions on the first day. Based on
the survey data, we fixed the price point at ₹15 per 3 chances. We decided to award the winners
with monetary rewards as well as other gifts like toys, dolls, chocolates etc. The game was set up
at amphitheatre from 5:30pm to 7:30pm.

No. of gaming sessions conducted= 47

Revenue generated = price * no. of gaming sessions

= ₹15 * 47
= ₹705
Total Variable Cost for Day 1 = ₹132

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Observation And Decision For Next Day
We faced competition from Rolls which affected the demand of our product and reduced the
purchasing power of people. The demand for our product on this day was much higher than
we expected.
After day one we decided to increase the price of our product to observe the market and we
also changed the apparatus of our product to engage more customers.

Day 2
The apparatus used for target game:
 Gun = 1Qty
 Sticky Notes = 1set

On day 2, we set up the stall in front of cafeteria for the second time. The session was conducted
between 8:00 to 10:00 pm and the rewards up for grabs were toys and products that you used to
use in your childhood.

On the second day, we changed the price to ₹25, which affected our customer turn up. The number
of gaming session conducted on day 2 was 29.

Revenue= Price * Number of gamming sessions

= ₹25 * 29
= ₹725

Total variable cost = ₹275

Observation And Decision For Next Day

Our competitor was Bhelpuri which badly affected the demand and we couldn’t get the
number of customers that we expected. Change in price also affected our sales. Although we
managed to reach our breakeven on this day we lost our customer base due to price and
competition. The price elasticity of demand was more than unit elastic.
After day 2 we decide to decrease our price in order to attract the customers.
We decided to keep the apparatus same to see the marginal utility and we also took offline
feedback from our customers regarding the price and difficulty level of our game. We also
decided to decrease the level of difficulty as this was something which also affected the
customers to play more.

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Day 3
The apparatus used for target game:
 Gun = 1Qty.
 Sticky Notes = 1set

On day 3, we set up the stall in cafeteria. The session was conducted between 5:30 to 7:30 pm and
the rewards up for grab were same as day 2.
To examine the effect of price, we decreased the price per game session of 3 chances to ₹20. Due
to a decrease in price, we witnessed more demand for our product and the number of gamming
sessions conducted rose up to 40.

Revenue= Price * Number of gamming sessions

= ₹20 * 40
= ₹800
Total variable cost = ₹315

Observation and Decision For Next Day

We only had one competitor on day 3 that is Oreo Shake and we also decreased the price, we
saw that price played an important in increased demand for the product.
For the next day we decided to keep the price same because we earlier observed that this
price brought customers to our stall. We also decided to change the apparatus.

Day 4
The apparatus used for target game:
 Ball = 3Qty.
 Glasses = 10Qty.

On day 4, we organised our event in amphitheatre for the second time. The session was conducted
between 5:30 to 7:30 pm and the rewards for the game were same as 1st day.

On the 4th day, we kept the price same i.e. ₹20. As we witnessed previously the customer turn out
went down further. The total number of gaming session conducted on this day was 34.

Revenue = Price * Number of games conducted

= ₹20 * 34

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 = ₹680

Total variable cost for day4 = ₹114

Observation And Decision For Next Day

People seemed to lose their interest in the game and due to weekends many went out of
campus which reduced the demand while price was still the same. We again faced
competition from Oreo Shake. We also learned the concept of Cross Price Elasticity as the
different price of Oreo Shake affected our demand. Although we didn’t have any competition
on this day due to the time effect we lost many customers.
For the upcoming days we decided to keep the activity on weekdays and we also decided to
promote our product on social media more often through Instagram and Snapchat.

Day 5
The apparatus used for target game:
 Ball = 3Qty.
 Glasses = 10Qty.

On day 5, we set up the stall in amphitheatre again to see the footfall for a lesser price point. The
session was conducted between 5:30 to 7:30 pm and the rewards up for grab were same as the
previous days.
To examine the effect of price, we decreased the price per game session of 3 chances to ₹15. Even
though we charged lesser money, on this particular day the demand fell down to 31.
Revenue= Price * Number of gamming sessions
= ₹15 * 31
= ₹465
Total variable cost = ₹85

Observation and Decision For Next Day

We faced competition from Pani-Puri, people were saving their money to invest in these
products/services instead of ours due to which we suffered from a low demand even after
reducing our price to Rs. 15. Although the decrease in demand was less than unit elastic we
thought this might be the right price to operate our business on the next day.

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Day 6
The apparatus used for target game:
 Ball = 3Qty.
 Glasses = 10Qty.

On day 6, we organised our event in cafeteria. The session was conducted between 8:00 to 9:30
pm and the rewards for the game were same as the previous days.

On the sixth day, we kept the price same as the previous day i.e. ₹15. As we witnessed previously
the customer turn out went down further. The total number of gaming session conducted on this
day was 26.

Revenue = Price * Number of games conducted

= ₹15 * 26
= ₹390

Total variable cost = ₹65

Observation And Decision For Next Day

We had lots of academic work being given to us in all the three batches that is why people
were not there to avail the benefits of our game stall and we saw a decrease in our demand
even after keeping the price same. For the next and final day we decided to increase the price
to 25 Rs. in order to gain more revenue.

Day 7
The apparatus used for target game:
 Gun = 1Qty.
 Stick Notes = 1Set

On day 7, we set up the stall in amphitheatre again to see the footfall for a higher price point. The
session was conducted between 5:30 to 7:00 pm and the rewards up for grab were same as the
previous days.
To examine the effect of price, we increased the price per game session of 3 chances to ₹25. As
expected due to increase in price on this particular day the demand fell down to 21.
Revenue= Price * Number of gamming sessions
= ₹25 * 21
= ₹525
Total variable cost = ₹115

Page 15
Observation
We clearly saw that people lost their interest in participating the activity with such a higher
price and due to the competition the market spending power of people also acted as a
determinant for the decrease in the demand for our product. Our decision to increase the
price to earn more revenue turned out to be a mistake we lost lots of customers due to this.
The price elasticity for this price point was more than unit elastic, which clearly justifies our
situation.

Cost Analysis

Item Day1 Day2 Day3 Day4 Day5 Day6 Day7 Total

Gun 260 0 0 0 0 0 0 260
Petrol 200 0 0 0 0 0 0 200
Ball 180 0 0 0 0 0 0 180
Sticky 0 45 45 0 0 0 0 90
Note
Cash 85 65 65 80 55 40 10 400
Reward
Bubbles 0 90 0 0 0 0 0 90
Box 0 0 0 0 0 0 0 0
Chocolate 0 0 0 0 0 0 20 20
Lunch 0 0 0 0 0 0 30 30
Box
Watch 0 0 0 0 0 0 20 20
Center 47 75 78 34 30 25 20 309
Fresh
Teddy 0 0 0 0 0 0 0 0
Smiley 0 0 25 0 0 0 0 25
BeyBlade 0 0 0 0 0 0 15 15
Scooter 0 0 102 0 0 0 0 102
Total 772 275 315 114 85 65 115 1741

*The above table shows the overall(fixed and variable) cost incurred on the business. Below
we have shown the schedules and curves for the Total and Average cost of our business.

Total Variable Cost, Total Fixed Cost and Total Cost

Total Variable Cost (TVC) 1101

Total Fixed Cost (TFC) 640
Total Cost (TC) 1741

Page 16
  Cost Curve has been plotted on the basis of Per Unit Cost.

Cost Curve
2000

1500
Cost

1000

500

226
1
10
19
28
37
46
55
64
73
82
91
100
109
118
127
136
145
154
163
172
181
190
199
208
217
Quantity

TFC TC TVC

Observation
After calculating all the total costs we observed the above few points:
1. Total Variable Cost kept on increasing with the increase in the total number of gaming
sessions because there was a cost of at lease 1Rs.(cost of candy) on each session.
2. Total Fixed Cost remained constant as we incurred this cost at the start of our business and it
remained same for every customer.
3. Total Cost is the combination of TVC and TFC, it kept on increasing with the increase in the
total number of gaming sessions because there was a subsequent increase in TVC.

Average Variable Cost, Average Fixed Cost and Average Total Cost

 Cost Curve has be plotted on the basis of Per Unit Cost.

Page 17
 Average Cost Curve
700

600

500

400

300

200

100

0
73

217
1
9
17
25
33
41
49
57
65

81
89
97
105
113
121
129
137
145
153
161
169
177
185
193
201
209

225
AVC AC AFC

* Cost Curve For AC & AVC

AC AVC
700
7
600 6
500 5
400
Cost

4
Cost

300 3
200 2
100 1
0 0
1
17
33
49
65
81
97
113
129
145
161
177
193
209
225

46

76
1
16
31

61

91
106
121
136
151
166
181
196
211
226

Quantity Quantity

Observation
After calculating all the total costs we observed the above few points:
1. Average Fixed Cost is the per unit cost of fixed factors and we can see that it is negatively
sloping because the Total Fixed Cost is constant. We should also observe that it never reaches to
zero, which means its curve will never touch any of the axis.

Page 18
2. Average Variable Cost is the per unit cost of variable factors. We can see in the schedule that
the AVC keeps changing its trend because the TVC is different for each session, it sometimes
rises or falls due to different variable cost incurred on each gaming session, which also leads to
the fluctuation in the Average Variable Cost curve.
3. Average Cost is the per unit cost of production. We can observe that AC keeps on decreasing
with the increasing number of gaming sessions because there was less fixed cost involved in the
later gaming sessions and ultimately there was no fixed cost, so it changed due to the change in
variable cost only.

Revenue Analysis

Days Quantity Cum. Revenue Cum. Revenue Avg. Marginal

Quantity Revenue Revenue
1 47 47 705 705 15 15
2 29 76 725 1430 18.81 25
3 40 116 800 2230 19.22 20
4 34 150 680 2910 19.4 20
5 31 181 465 3375 18.64 15
6 26 207 390 3765 18.18 15
7 21 228 525 4290 18.81 25

 Revenue Curve has been plotted on the basis of Per Unit Revenue Schedule.

Revenue
5000

4000
Revenue

3000

2000

1000

0
226
1
10
19
28
37
46
55
64
73
82
91
100
109
118
127
136
145
154
163
172
181
190
199
208
217

Quantity

TR AR MR

* Revenue Curve For AR & MR

Page 19
 Zoomed version of Revenue
30

25

20

15

10

0
33
1
9
17
25

41
49
57
65
73
81
89
97
105
113
121
129
137
145
153
161
169
177
185
193
201
209
217
225
AR MR

Observation
1. MR is referred as the revenue earned after selling one additional unit of the product. We were
selling product at a certain price and earned revenue for that, this is why MR is equal to price of
the product.
2. AR is constantly increasing for successive increase in quantity sold. It is increasing at different
rates. In normal situations it starts decreasing after a certain point but we were operating in short
run that is why we couldn’t see that happening for our product.
3. TR is constantly increasing for each unit of gaming session because we are earning revenue
from each customer. The numeric value for TR is equal to the numeric value we get after adding
the MR. TR is increasing with respect to the price of the product.

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Break Even Analysis

Break-even point is considered to be the point on which our total revenue is equals to the
total cost for the first time.

Schedule
Output TVC TFC TC MC TR
50 190 640 830 1 780
51 196 640 836 6 805
52 197 640 837 1 830
203 640 843 6 855
53
54 214 640 854 11 880
55 225 640 865 11 905
56 226 640 866 1 930
57 317 640 957 91 955

Cost-Revenue Analysis
5000

4000
Cost-Revenue

3000

2000

1000

0
226
1
10
19
28
37
46
55
64
73
82
91
100
109
118
127
136
145
154
163
172
181
190
199
208
217

Output

TFC TC TVC MC TR

Observation
After analysing the above schedule and curve carefully we can see that we have managed to
cover our total cost after conducting the 53 sessions of our game.
The Break-even point of our business is coming where our Total Cost is 843 and our Total
Revenue is 855 and you can see in the curve that it is coming at the point where Total Revenue
Curve is bisecting Total Cost Curve.

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After this point Total Revenue keeps on rising and always remains above the Total Cost because
we are incurring less variable cost and our return on investment is higher after this point. We
have managed to cover all the fixed costs till this point.

Elasticity Analysis

Actual Price Elasticity V/S Sample Price Elasticity

Formula: % Change In Quantity Demanded

% Change In Price

% %
Change Change
In In
Price Quantity Price Quantity Actual Elasticity Sample Elasticity
15 104
20 74 33% -29% -0.8654 -0.2727
25 50 25% -32% -1.2973 -2.8

Observations
After analysing the above schedule carefully we can say that,
1. The price elasticity of demand has shown the similar trend for both sample and actual price
elasticity.
2. Price Elasticity Of Demand remained less than unit elastic for the price point of 20 Rs. for
both actual and estimated demand. There is a difference in numeric value because of number of
people on which demand was estimated and calculated.
3.Price Elasticity Of Demand remained more than unit elastic for the price point of 25 Rs. for
both actual and estimated demand. There is a difference in numeric value because of number of
people on which demand was estimated and calculated.

Law Of Demand

It states that factors other than price remains constant. Price falls quantity demanded
expands, price rises quantity demanded contracts.

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Observations

In our business their were other factors(we have mentioned them earlier) which affected the
demand for the product but we observed that price was acting as the major determinant for
the demand on different days. That is why we observed law of demand operating on our
business, the schedule and curve given below shows that their has been decrease in the demand
with respect to increase in price.

*Assumptions : All the other factors remained constant.

* We have taken the Cumulative quantity of different prices.

Market Demand
120

100
Price Quantity
80
Qunatity

60 15 104
40
20 74
20

0
0 5 10 15 20 25 30
25 50
Price

Law of Diminishing Marginal Utility

Marginal Utility: It is the utility derived from the consumption of last unit purchased.

Observation
1. Consumer was rational.
2.There was no time gap between the consumption.
We observed that people were interested in playing the successive number of gaming sessions.
Marginal Utility for most of the customers didn’t decrease after playing but in certain situations

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it remained constant or even increased. We analysed two reasons for this and they are:
1. They wanted to win next time after losing for the first time.
2. They wanted to win continuously (assuming that they won during their last chance).
Through this observation we can say that our product was an exception to law of
diminishing marginal utility.

Cross Price Elasticity

It shows the relationship between two products and shows the sensitivity of change in
quantity demanded of one product.

Observation

Although we didn’t have any substitute for our product but we considered other few businesses(
have been mentioned above) as our competition because we were operating in the same market.
The reason why we don’t consider them as our substitute because of difference in the level of
satisfaction.
We faced competition from Oreo Shake on two consecutive days and we saw that the price of
Oreo Shake affected the demand of our product and reduced the purchasing power of the
customers. The change in price for Oreo Shake was 25% which affected our demand by 15%.

Future Sales Forecasting

After operating for 7 days on three different price levels i.e. 15, 20 and 25 Rs., we observed that
maximum number of customers(104) visited our stall when price was 15 so we would like to sell
our product on this price on the next. To forecast the future sales on this price level we are using
Moving Averages Method to forecast the future sales.

Price Number of Quantity

15 47
15 31
15 26
34.66666667

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  We forecasted the future sales using 3 point moving average method.
 34.66 is the expected quantity for 8th day.
 We should keep this in mind that this is not the actual sales as there are other factors as
well which can affect the demand of our product.

Key Takeaways from The Project

 Actual scenarios were very different from theoretical scenarios
 Price came out to be the main demand determinant
 Apart from known costs, a lot of miscellaneous costs were incurred
 We learned to apply economics concepts in real-life scenarios
 Through this project, we got an opportunity to collect and analyse data and we came with
a conclusion using our analytical reasoning skills

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