(a) For the data given in Problem 7.2, estimate the sample regression line and calculate the R² statistic. Comment upon the results.

(b) Calculate the standard error of the estimate and the standard errors of the coefficients. Is the slope coefficient significantly different from zero? Is demand inelastic?

(c) Test the overall significance of the regression and comment upon your result.

Problem 7.2

The data below show consumption of margarine (in ounces per person per week) and its real price, for the UK.

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Year Consumption Price Year Consumption Price 1970 2.86 125.6 1980 3.83 104.2 1971 3.15 132.9 1981 4.11 95.5 1972 3.52 126.0 1982 4.33 88.1 1973 3.03 119.6 1983 4.08 88.9 1974 2.60 138.8 1984 4.08 97.3 1975 2.60 141.0 1985 3.76 100.0 1976 3.06 122.3 1986 4.10 86.7 1977 3.48 132.7 1987 3.98 79.8 1978 3.54 126.7 1988 3.78 79.9 1979 3.63 115.7