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A manufacturer of computer workstations gathered average monthly sales figures from its 56 dealerships across the country and estimated the demand for its product using the following regression equation: Q=B0+ B₁ PRICE + ẞ2 ADV + ẞ3 PRICE C where Q is the number of computer workstations sold monthly, PRICE is the price of the computer workstation, ADV is the advertising expenditures, and PRICE, is the average price of a leading competitor's computer workstation. The regression results are as follows: DEPENDENT VARIABLE: Q PROB(F-STATISTIC) OBSERVATIONS: 56 R-SQUARED 0.68 F-STATISTIC 21.25 Standard 0.04 Variable Coefficient error Intercept 15,000.0 5234.0 PRICE -2.8 1.29 ADV 150.0 175.0 PRICEC 0.2 0.13 a. Which coefficients have a statistically significant effect on the number of workstations sold? Substantiate your answers appropriately. b. Calculate the expected number of workstations sold when PRICE = $7,000, ADV = $52, and PRICE $8,000. c. Calculate the own-price elasticity of demand for computer workstations. d. Calculate the upper and lower 95% confidence interval for ADV.

A manufacturer of computer workstations gathered average monthly sales figures from its 56 dealerships across the country and estimated the demand for its product using the following regression equation: Q=B0+ B₁ PRICE + ẞ2 ADV + ẞ3 PRICE C where Q is the number of computer workstations sold monthly, PRICE is the price of the computer workstation, ADV is the advertising expenditures, and PRICE, is the average price of a leading competitor's computer workstation. The regression results are as follows: DEPENDENT VARIABLE: Q PROB(F-STATISTIC) OBSERVATIONS: 56 R-SQUARED 0.68 F-STATISTIC 21.25 Standard 0.04 Variable Coefficient error Intercept 15,000.0 5234.0 PRICE -2.8 1.29 ADV 150.0 175.0 PRICEC 0.2 0.13 a. Which coefficients have a statistically significant effect on the number of workstations sold? Substantiate your answers appropriately. b. Calculate the expected number of workstations sold when PRICE = $7,000, ADV = $52, and PRICE $8,000. c. Calculate the own-price elasticity of demand for computer workstations. d. Calculate the upper and lower 95% confidence interval for ADV.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A manufacturer of computer workstations gathered average monthly sales figures from its 56 dealerships across the country and estimated the demand for its product using the following regression equation: Q=B0+ B₁ PRICE + ẞ2 ADV + ẞ3 PRICE C where Q is the number of computer workstations sold monthly, PRICE is the price of the computer workstation, ADV is the advertising expenditures, and PRICE, is the average price of a leading competitor's computer workstation. The regression results are as follows: DEPENDENT VARIABLE: Q PROB(F-STATISTIC) OBSERVATIONS: 56 R-SQUARED 0.68 F-STATISTIC 21.25 Standard 0.04 Variable Coefficient error Intercept 15,000.0 5234.0 PRICE -2.8 1.29 ADV 150.0 175.0 PRICEC 0.2 0.13 a. Which coefficients have a statistically significant effect on the number of workstations sold? Substantiate your answers appropriately. b. Calculate the expected number of workstations sold when PRICE = $7,000, ADV = $52, and PRICE $8,000. c. Calculate the own-price elasticity of demand for computer workstations. d. Calculate the upper and lower 95% confidence interval for ADV.
Transcribed Image Text:A manufacturer of computer workstations gathered average monthly sales figures from its 56 dealerships across the country and estimated the demand for its product using the following regression equation: Q=B0+ B₁ PRICE + ẞ2 ADV + ẞ3 PRICE C where Q is the number of computer workstations sold monthly, PRICE is the price of the computer workstation, ADV is the advertising expenditures, and PRICE, is the average price of a leading competitor's computer workstation. The regression results are as follows: DEPENDENT VARIABLE: Q PROB(F-STATISTIC) OBSERVATIONS: 56 R-SQUARED 0.68 F-STATISTIC 21.25 Standard 0.04 Variable Coefficient error Intercept 15,000.0 5234.0 PRICE -2.8 1.29 ADV 150.0 175.0 PRICEC 0.2 0.13 a. Which coefficients have a statistically significant effect on the number of workstations sold? Substantiate your answers appropriately. b. Calculate the expected number of workstations sold when PRICE = $7,000, ADV = $52, and PRICE $8,000. c. Calculate the own-price elasticity of demand for computer workstations. d. Calculate the upper and lower 95% confidence interval for ADV.
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