Final answer:
The chain ratio method is a technique used to estimate market demand by examining the relationship between various factors. It involves analyzing the ratio of changes in different variables to estimate the change in market demand. This method is commonly used in economics and business to forecast market demand and determine the relationship between demand and other factors.
Step-by-step explanation:
Chain Ratio Method for Estimating Market Demand
The chain ratio method is a technique used to estimate market demand by examining the relationship between various factors that influence demand. It involves analyzing the ratio of changes in different variables to estimate the change in market demand. This method is commonly used in economics and business to forecast market demand and determine the relationship between demand and other factors.
Application in Determining the Market Demand Equation
When using the chain ratio method to determine the market demand equation, you would need to identify the relevant variables that influence demand, such as price, income, population, and advertising expenditure. By analyzing the ratio of changes in these variables, you can estimate the impact of each factor on market demand. The market demand equation can then be constructed using these estimates to predict the quantity of a product or service that will be demanded at different price levels.