DEMAND ESTIMATION

COMPLETEEEE ANSWER WITH SOLUTION PELASE

Year(t )	Ad Expenses	Sales Revenue		e = (Y - )	E^2 = (Y - )^2
1	10,000	44,000
2	9,000	40,000
3	11,000	42,000
4	12,000	46,000
5	11,000	48,000
6	12,000	52,000
7	13,000	54,000
8	13,000	58,000
9	14,000	56,000
10	15,000	60,000

• Calculate standard error of b
• Determine t statistic or t ratio
• Run a t test (compare tabulated and calculated t)
• Decide whether to accept or reject null hypothesis: "There is no significant relationship between X (advertising) and Y (sales)."

TEST:

• Compare the calculated t ratio to the critical value of the t distribution with degrees of freedom (df)
• Statistical significance at 5% level
• Table: Areas in the Tails of the T Distribution
• Column: Probabilities = .05 significance or .95 correctness
• Row: df = n - k

GIVE CONCLUSION AND RECOMMENDATION

1. Conclusions: based on your calculations and t-test, formulate conclusions.

2. Recommendations: based on your conclusions, make recommendations to the firm.