each independent variable indicates the marginal relation between that variable and unit sales, holding constant the effects of all the other variables in the demand function. For example, the -19,875.954 coefficient for P, the average price charged per meal (customer ticket amount), indicates that when the effects of all other demand variables are held constant, each $1 increase in price causes annual sales to decline by 19,875.954 units. The 15,467.936 coefficient for Px, the competitor price variable, indicates that demand for San Francisco meals rises by 15,467.936 units per year with every $1 increase in competitor prices. Ad, the advertising and promotion variable, indicates that for each $1 increase in advertising during the year, an average of 0.261 additional meals are sold. The 8.780 coefficient for the I variable indicates that, on average, a $1 increase in the average disposable income per household for a given market leads to a 8.780-unit increase in annual meal demand.

CASE STUDY (continued)

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