Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Question
Chapter 4, Problem 8E
(a)
To determine
Estimated regression line.
(b)
To determine
Economic interpretation of the estimated slope (b) coefficients.
(c)
To determine
The hypothesis that there is no relationship between the variables at 0.05 significance level.
(d)
To determine
Coefficient of determination.
(e)
To determine
(f)
To determine
Best estimate of the product sales when promotional expenditures are $80,000 and the selling price is $12.50.
(g)
To determine
Point promotional and price elasticities at the values of promotional expenditure and selling price equal to $80,000 and $12.50 respectively.
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Suppose the Sherwin-Williams Company has developed the following multiple regression model, with paint sales Y (x 1,000 gallons) as the dependent variable and promotional expenditures A (x $1,000) and selling price P (dollars per gallon) as the independent variables.
Y=α+βaA+βpP+εY=α+βaA+βpP+ε
Now suppose that the estimate of the model produces following results: α=344.585α=344.585, ba=0.102ba=0.102, bp=−11.192bp=−11.192, sba=0.173sba=0.173, sbp=4.487sbp=4.487, R2=0.813R2=0.813, and F-statistic=11.361F-statistic=11.361. Note that the sample consists of 10 observations.
1.) According to the estimated model, holding all else constant, a $1,000 increase in promotional expenditures decrease or increase sales by approximately 102,813 or 11,192 gallons. Similarly, a $1 increase in the selling price decrease or increase sales by approximately 813,11,192 or 102 gallons.
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Refrigerator prices are affected by characteristics such as whether or not the refrigerator is on sale, whether or not it is listed as a Sub-
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(a) Write the regression model, being careful to exclude the base indicator variable. (Negative amounts should be indicated by a
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Suppose you decide to estimate a student consumption function. After you run an OLS regression on your data set with 36 observations, you obtain the following. The estimated regression, along with standard errors and t-statistics,
CO = - 47.143 + 0.9714 YD
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Chapter 4 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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