What is demand estimation ? Explain the methods of demand estimation?
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Demand estimation in managerial economics refers to predicting how consumers will behave in relation to your products and services in the future. The estimation is often based on a number of different variables that can include changes in price, changes in how your competition increases or decreases its prices, and economic factors such as a recession, which would affect consumer buying. By applying these variables, you can analyze how your customer’s demands might change for the better or for the worse depending on a specific factor. As a result, you may decide that you can raise prices because demand will remain steady or even increase, or you may decide that you will have to pull back on production because circumstances are not likely to be favorable. Demand estimation in managerial economics is an important way for you to determine the short-term and long-term course of your business.
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