Managerial Economics

Module 2Demand Theory and Estimation

Activity 4Case 3

Using SPSS, MS Excel or other statistical software package, run the given data and answer the following in MS Word.

Assume that Electronix, Inc., a small startup company that distributes a particular business machine, has the following monthly data on unit sales (Q), price (P), advertising expenditures (AD), and personal selling expenditures (PSE) over the past year.

If a linear relation between unit sales, price, advertising, and personal selling expenditures is hypothesized, the regression equation takes the following form:

where is the number of units sold, P is the average price per month, D is advertising expenditures, PSE is personal selling expenditures, and is a random disturbance term - all measured on a monthly basis over the past year.

A.Present the computer results of the regression.

Show all results in two decimal places.

MonthUnits Sales Advertising Personal Selling

Price ($) Expenditures ($) Expenditures ($)

January2,5003,80026,80043,000

February2,2503,70023,50039,000

March1,7503,60017,40035,000

April1,5003,50015,30034,000

May1,0003,20010,40026,000

June2,5003,20018,40041,000

July2,7503,20028,20040,000

August1,7503,00017,40033,000

September1,2502,90012,30026,000

October3,0002,70029,80045,000

November2,0002,70020,30032,000

December2,0002,60019,80034,000