Question: Use the data below to estimate a multiplicative demand function for Mrs. Smyths frozen fruit pies. Report your parameter estimates and regression statistics for the

Use the data below to estimate a multiplicative demand function for Mrs. Smyth’s frozen fruit pies. Report your parameter estimates and regression statistics for the multiplicative model.

SUMMARY OUTPUTRegression StatisticsMultiple R 0.933296R Square 0.871042Adjusted 0.85217Standard E 67583.78Observatio 48

Q_it = b₀ + b₁P_it + b₂A_it + b₃PX_it + b₄Y_it + b₅Pop_it + b₆T_it + u_it

a) Describe the statistical significance of each of the independent variables included in the Mrs. Smyth’s demand equation. Interpret the coefficient of determination and F statistic for the multiplicative model.

b) Compare the statistical properties of your multiplicative model with the linear model. Which fits the data better? Explain why.

c) In the multiplicative model perform a statistical test to determine whether demand is elastic, your competitor’s product is a substitute, and if pies are a normal good at the 95 percent confidence level.

d) What is your estimate of the price elasticity of demand, advertising elasticity of demand, income elasticity of demand, and cross price elasticity of demand in the multiplicative model? Compare these elasticity estimates with the corresponding elasticities in the linear model when calculated at mean values for each variable.

e) Using the linear model, what is the expected value of next quarter’s unit sales in the Minneapolis-St. Paul, MN market? Use the value of each independent variable for the last period in the MN market for this forecast. Derive the 95 percent confidence interval for next quarter’s actual sales in the Minneapolis- St. Paul market.

SUMMARY OUTPUT Regression Statistics Multiple R 0.933296 R Square 0.871042 Adjusted F 0.85217 Standard E 67583.78 Observatio 48 ANOVA Regression Residual Total df SS MS 6 1.26E+12 2.11E+11 41 1.87E+11 4.57E+09 47 1.45E+12 F ignificance F 46.1556 1.08E-16 Coefficientstandard Err t Stat P-value Lower 95% Upper 95%.ower 95.0%pper 95.0% 529773.7 271330.9 1.952501 0.057729 -18190.1 1077737 -18190.1 1077737 -122607 16422.38 -7.46584 3.65E-09 -155772 -89441.2 -155772 -89441.2 1.650494 3.53691 0.001021 2.504408 9.170888 2.504408 9.170888 13449.22 2.220694 0.031957 2705.347 57027.83 2705.347 57027.83 -5.5554 9.640858 -5.5554 9.640858 1.9E-09 0.022291 0.038225 0.022291 0.038225 3.762305 0.542946 0.590107 Intercept Price (S) Advertising 5.837648 Competitor 29866.59 Income ($) 2.042729 Population 0.030258 0.003945 7.67036 Time Varia 2815.495 4539.243 0.620257 0.538521 -6351.69 11982.68 -6351.69 11982.68

Step by Step Solution

★★★★★

3.43 Rating (156 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Here is a table summarizing the statistical significance of each independent variable and the regression statistics for the multiplicative model Independent Variable Coefficient Standard Error tStatis... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

The data in Table 8E.11 were taken by one operator during a gauge capability study. (a) Estimate gauge capability. b) Does the control chart analysis of these data indicate any potential problem in...

The data in Table 1.4.9 give death rates (per 100,000 population) for 10 leading causes in 1998 (source: National Center for Health Statistics, US Department of Health and Human Services). (a)...

This exercise uses the data in Table 6.9. Suppose that on February 15, 1994 a firm wants to enter into a forward contract to purchase 5-year Treasuries, with coupon rate 6%, in two years: (a) Compute...

A 10-year study conducted by the American Heart Association provided data on how age, blood pressure and smoking relate to the risk of strokes. Risk is interpreted as the probability (times 100) that...

Article review on journal of The Role of Micro and Small Business Enterprises in Linking Youth and Women in to Business: A Case Study in South Gondar Zone, Ethiopia Dejen Debeb Asmare1Alebel Weretaw...

In Lieu of the Thursday February 29t in-class assignment, please answer the following questions. Due no later than Friday March 8" midnight. 1. Use the data provided to you for the most recent...

I need your help with this: Can you please quote from the attached chapters / resource if possible? Corporations often use different costs of capital for different operating divisions. Using an...

Cedar Fair CaseCompanion Case to Six Flags CaseFrom 1998-2006 there were four large, well-funded competitors in the regional theme park industry. Inorder: Six Flags, Cedar Fair, Paramount Parks, and...

Signature Assignment Overview Signature Assignment: A Financial Statement Analysis - A Comparative Analysis of Apple, Inc. and Microsoft, Inc. Description This course contains a Course Project, where...

Please help with the case analysis. Need the answers in the next 4 hours. Questions to be answered: Based on the information and assumptions provided in the case, calculate the market potential for...

A father deposited a total amount of P80,500 on two different investments. The first investment earns a rate of simple interest 2.5 times the second investment. In 5 years, the first investment grows...

Terri is the new president of "MD Management," a corporation set up to manage physician practices. Terri has never been very concerned with minority shareholders because she does not believe that...

E5.7 Effective control of insulin injections can result in better lives for diabetic persons. Automatically controlled insulin injection by means of a pump and a sensor that measures blood sugar can...

Danny lives in Ontario and earns a salary of $92,500 annually. Deductions from his pay are as follows: CPP $2,356 EI $469 Employer pension contribution $4,625 Employee pension contribution $4,625...

Based on your analysis of Apples most recent financial statements, predict whether Apples financial health will likely improve or deteriorate over the next five (5) years. Provide a rationale for...

The shareholders tentatively plan to distribute only enough cash out of Ladue during the current year to enable them to pay their income tax on corporate income, including the net capital gain...

I am doing the business report for my assignment. Please help me do the Cash Flow Statement for the year analysis. Please let me know what else information do I need. Team - The Greenyard Hotel Cash...

How does the primate orbit compare with those of most other mammals? Select the best answer from those provided. Primate orbits are smaller than those of most other mammals Primate orbits are larger...

I need to see the SPSS output. You need to have all z-scores, all charts, all descriptives data from SPSS, everything you used to answer the questions. I am sending you what the previous tutor sent...

A Journal Article Review for " The interaction between technology, business environment, society, and regulation in ICT industries". 1. Write the Title that reflects the main focus of your work. ......

Based on the content of these articles Describe the microeconomic principles being used. What is driving the demand for data? What impact will regulations on the use of private data have on supply,...

1: Indicate which laws are present in Japan and the level of maturity of these laws insofar as they pertain to privacy and the protection of people 2: Imagine that you are a lawyer working for a...

I need these today, ill give a like for sure! This is for questions 27-34 Perform a scenario analysis creating a best case and a worst case in addition to the base case. The managers give you the...

(JAVA - DATA STRUCTURES) Hi, THIS IS THE FOURTH TIME I HAVE POSTED THIS QUESTION AND NOBODY WANTS TO HELP ME. PLEASE, I NEED SOMEONE TO HELP ME. I need help with the program CountryDisplayer.java and...