Demand Estimation

Demand Estimation is possible through the following ways: Survey Method Market experiment Consumer Clinics Virtual Shopping Regression Analysis

Survey Method
To collect the information about the demand, researchers are using participant observation method or focus group study. Primary Method of data collection Interview Questionnaire Phone Fax Email

 Secondary Method Journals

Periodicals Annual reports Quarterly reviews Monthly reports Statistical Bulletins

 Market experiments
To estimate the demand for any product, select several markets with same socio economic characteristics and compare it with any other market due to any change in price level, supply and demand. By using the census data, a firm can determine the demand for its products keeping in view the age, gender, income, family size and level of education of a particular society.

Consumer clinics
These are laboratory experiments in which certain group of people are selected and a specific amount of income has been given to them. The people are asked to spend according to their discretion and the data has been collected about the demand. It is an artificial and short-term method to collect the information.

 Virtual shopping
With the advent of modern technology, the people are preferring the virtual shopping and the data can be collected about demand of particular things but it is not true estimates due to lack of technological facilities in rural areas which consists of around 65% population of Pakistan

Regression Analysis
Simple Regression model Multiple Regression model

Demand Estimation
The most common method for demand estimation is Regression Analysis in which average relationship between dependent and independent variables have been analyzed. There are four steps to estimate the demand through regression analysis
The first step is model specification of demand function. It involves the identification of most important variables which affect the demand. Second step involves the data collection and its correct insertion in the program like SPSS or E. Views. The data can be gathered on yearly, quarterly, monthly or weekly basis.

 Third step is to specify the functional form of the demand equation to be estimated. Fourth step is to estimate with the help of regression method; OLS method and then interpret in a simple and logical manner.
Qd f ( P, P , Y , T , W , Pop , GP , P e , Y e ) 0

Demand Estimation
There are two types of Regression equation

Simple Regression Equation Multiple Regression Equation If there is only one independent variable then it a simple regression equation and if more than one independent variables, then it is Multiple Regression Equation

Demand Estimation
The most common method for demand estimation is Regression Analysis in which average relationship between dependent and independent variables have been analyzed. Qd P Where an error term or Random is Term which captures any shock event that may effect the dependent variable.

 There are certain conversions which are required to estimate the demand. There are three main models;
Economic Model Mathematical Model Econometric Model or Statistical Model For estimation of the demand, firstly, we have to convert economic model to mathematical model and then into statistical model. With the help of statistical techniques, we can estimate the demand