# You have beenpresented with the following data and asked to fit statisti­cal demandfunctions: REGION SALES (Y) (‘000 gallons) ADVERTISING EXPENSES (A) (\$’000) SELLING PRICE (P) (\$/gallon) DISPOSABLE...

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You have been
presented with the following data and asked to fit statisti­cal demand
functions:

 REGION SALES (Y)(‘000 gallons) ADVERTISING EXPENSES (A)(\$’000) SELLING PRICE (P)(\$/gallon) DISPOSABLE INCOME (M)(\$’000) 1 160 150 15.00 19.0 2 220 160 13.50 17.5 3 140 50 16.50 14.0 4 190 190 14.50 21.0 5 130 90 17.00 15.5 6 160 60 16.00 14.5 7 200 140 13.00 21.5 8 150 110 18.00 18.0 9 210 200 12.00 18.5 10 190 100 15.50 20.0

Use any multiple
regression packages to estimate a linear relationship between the dependent
variable and the independent variables.

a.
Linear Relationship

i.
Identify the dependent and independent
variables.

ii.
Estimate a linear relationship between the
dependent variable and all the independent variables.

iii.
What are the tests that you would use to
determine the ‘goodness-of-fit’ of the estimated demand function? Conduct the
tests and explain the results.

iv.
Discuss the economic implications of the
various coefficients.

b.
Non-linear relationship.

i.
Estimate a logarithmic form of the demand
function.

ii.
Is the estimated demand function ‘good’? Explain

iii.
Compare with the linear form above.
Elaborate.

Answered Same DayAug 07, 2022

## Answer To: You have beenpresented with the following data and asked to fit statisti­cal demandfunctions:...

Shakeel answered on Aug 07 2022
(a)
i.    The dependent variable is ‘Sales’ and independent variables are ‘Advertising expenses’, ‘Sel
ling price’ and Disposable income.
ii.    To establish the linear relationship, the multiple regression is run. According to the result, the relationship is defined by the following equation:
Y = 310.24 + 0.008*A – 12.20*P + 2.677*M
iii.    The goodness of fit can be determined by the F-statistic...
SOLUTION.PDF