Suppose the Kalamazoo Brewing Company (KBC) currently sells its micro-brews in a seven-state area: Illinois, Indiana, Michigan, Minnesota, Mississippi, Ohio, and Wisconsin. The company’s marketing department has collected data from its distributors in each state.

These data consist of the quantity and price (per case) of microbrews sold in each state, as well as the average income (in thousands of dollars) of consumers living in various regions of each state. The data for each state are available online at www.mhhe.com/baye8e under the filename Q19.xls, where there are multiple tabs at the bottom of the spreadsheet, each referring to one of the seven states selling the Kalamazoo Brewing Company’s microbrews. Assuming that the underlying demand relation is a linear function of price and income, use your spreadsheet program to obtain least squares estimates of the state’s demand for KBC microbrews. Print the regression output and provide an economic inter-pretation of the regressionresults.

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1 SUMMARY OUTPUT 2 3 Regres 4 MultipleR 5 R-Square 6 Adjusted RSquare sion Statistics 0.76 0.57 0.49 47.13 25 Standard Error 9 10 Analysis of Variance Degrees of Freedom Sum of Squares Mean SquareF Significance F 12 Regressicn 13 Residual 14 Total 15 16 17 Intercept 18 Price of Residential Heating Fuel9169 19 Price of Natural Gas 20 Price of Electricity 21 Income 60936.56 44431.27 105367.84 15234.14 6.86 .03 20 2221.56 24 Coefficients | Standard Error | | P-Value | Lower 95% | Upper 95% t-Stoistic 3.15 -3.15 4.79 136.96 43.88 -11.92 -0.050 43.46 29.09 9.17 8.35 0.3500 0.01 0.01 0.00 0.17 0.90 50.60 -149.49 25.66 -28.51 -0.75 223.32 -33.89 62.10 4.67 0.65 -0.14