Take Home Assignment 4 (***Round all the answers and intermediate calculations to two decimal places***) Question...

 

Transcribed Image Text:

Take Home Assignment 4 (***Round all the answers and intermediate calculations to two decimal places***) Question 1 (100 Marks) The following table is the regression results from the econometric model: LOG(SALES) =B₁ + B₂LOG (PRICE) + BADVERT + e For a sample of 66 observations. SALES: Monthly Sales of product A ($1000) PRICE: A price Index of product A (S1) ADVERT: Adverting Expenditure on product A ($1000) Dependent Variable: LOGSALES Method: Least Squares Date: 03/19/20 Time: 20:04 Included observations: 66 Variable C LOGPRICE ADVERT R-squared Adjusted R-squared S.E. of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) Coefficient Std. Error t-Statistic Prob 5.325153 0.141880 37.53270 0.0000 -0.580571 0.081114 -7.157444 0.0000 0.016823 0.009220 1.824630 0.0728 0.465097 Mean dependent var R² 0.061426 0.237708 92.02023 Hannan-Quinn criter. S.D. dependent var Akalke info criterion Schwarz criterion 27.38922 Durbin-Watson stat 0.000000 4.351839 0.082685 -2.697583 -2.598053 -2.658254 2.234632 a) State the estimated linear equation: LOG (SALES) = b₁ + b₂LOG (PRICE) + b3ADVERT+e (20 marks) b) Interpret the estimates for B₂ and B3- (20 marks) c) Using the p-value approach, are B₂ and 3 statistically different from zero at a 5% significance level? State the null and alternative hypotheses, the decision rule and the results. (20 marks) d) Calculate the 99% confidence interval for B₂. (20 marks) e) Compute the value of the adjusted R-square (R²). (20 marks) Take Home Assignment 4 (***Round all the answers and intermediate calculations to two decimal places***) Question 1 (100 Marks) The following table is the regression results from the econometric model: LOG(SALES) =B₁ + B₂LOG (PRICE) + BADVERT + e For a sample of 66 observations. SALES: Monthly Sales of product A ($1000) PRICE: A price Index of product A (S1) ADVERT: Adverting Expenditure on product A ($1000) Dependent Variable: LOGSALES Method: Least Squares Date: 03/19/20 Time: 20:04 Included observations: 66 Variable C LOGPRICE ADVERT R-squared Adjusted R-squared S.E. of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) Coefficient Std. Error t-Statistic Prob 5.325153 0.141880 37.53270 0.0000 -0.580571 0.081114 -7.157444 0.0000 0.016823 0.009220 1.824630 0.0728 0.465097 Mean dependent var R² 0.061426 0.237708 92.02023 Hannan-Quinn criter. S.D. dependent var Akalke info criterion Schwarz criterion 27.38922 Durbin-Watson stat 0.000000 4.351839 0.082685 -2.697583 -2.598053 -2.658254 2.234632 a) State the estimated linear equation: LOG (SALES) = b₁ + b₂LOG (PRICE) + b3ADVERT+e (20 marks) b) Interpret the estimates for B₂ and B3- (20 marks) c) Using the p-value approach, are B₂ and 3 statistically different from zero at a 5% significance level? State the null and alternative hypotheses, the decision rule and the results. (20 marks) d) Calculate the 99% confidence interval for B₂. (20 marks) e) Compute the value of the adjusted R-square (R²). (20 marks)

Answer rating: 100% (QA)

a LOG SALES 00811 71574 LOGPRICE 00369 ADVERT e This means that on average a one percent increase in price will lead to a 716 percent decrease in sale... View the full answer