Due Week 3 and worth 200 points
Imagine that you work for the maker of a leading brand of low-calorie, that estimates the following demand equation for its from 26 supermarkets around the country for the month of April.
For a refresher on independent and dependent variables, please go to Sophias Website and review the Independent and , located at” target=”_blank” rel=”nofollow noopener”>http://www.sophia.org/tutorials/independent-and-dependent-variables–3.
Option 1
Note:The following is a regression equation. Standard errors are in parentheses for the demand for widgets.
QD = – 5200 – 42P + 20PX+ 5.2I + 0.20A + 0.25M
(2.002) (17.5) (6.2) (2.5) (0.09) (0.21)
R2 = 0.55 n = 26 F = 4.88
Your supervisor has asked you to compute the elasticities for each independent variable. Assume the following values for the independent variables:
Q = Quantity demanded of 3-pack units
P (in cents) = Price of the product = 500 cents per 3-pack unit
PX(in cents) = Price of leading competitors product = 600 cents per 3-pack unit
I (in dollars) = Per capita income of the standard metropolitan statistical area
(SMSA) in which the supermarkets are located = $5,500
A (in dollars) = Monthly advertising expenditures = $10,000
M = Number of microwave ovens sold in the SMSA in which the
supermarkets are located = 5,000
Option 2
Note:The following is a regression equation. Standard errors are in parentheses for the demand for widgets.
QD = -2,000 – 100P + 15A + 25PX+ 10I
(5,234) (2.29) (525) (1.75) (1.5)
R2 = 0.85 n = 120 F = 35.25
Your supervisor has asked you to compute the elasticities for each independent variable. Assume the following values for the independent variables:
Q = Quantity demanded of 3-pack u
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