1. Regression Statistics. June Ward, controller for NAFTA, Inc., has asked you to analyze demand in 30 regional markets for Beaver's Cleavers, a new brush cutting device, dubbed Product Y. A statistical analysis of demand in these markets shows (standard errors in parentheses):

QY

= 2,000 25P + 10PX + 0.025I

(1,500) (8) (4) (0.011)

R2

= 80%

F

= 34.7

Standard Error of the Estimate = 40

Here, QY is market demand for Product Y, P is the price of Y in dollars, A is dollars of advertising expenditures, PX is the average price in dollars of another (unidentified) product, and I is dollars of household income. In a typical market, the price of Y is $100, PX is $50, and disposable income per family averages $80,000.

A.

Does each independent X variable have a significant effect on the dependent Y variable?

B.

What percentage of demand variation is explained by this model?

C.

Does this model explain a significant share of demand variation?

ANSWERS;