A manufacturer of computer workstations gathered average monthly sales figures from its56 dealerships across the country and estimated the demand for its product using thefollowing regression equation:Q=B0+ B₁ PRICE + ẞ2 ADV + ẞ3 PRICE Cwhere Q is the number of computer workstations sold monthly, PRICE is the price of thecomputer workstation, ADV is the advertising expenditures, and PRICE, is the average priceof a leading competitor's computer workstation. The regression results are as follows:DEPENDENT VARIABLE: QPROB(F-STATISTIC)OBSERVATIONS: 56R-SQUARED0.68F-STATISTIC21.25Standard0.04Variable Coefficient errorIntercept 15,000.05234.0PRICE-2.81.29ADV150.0175.0PRICEC0.20.13a. Which coefficients have a statistically significant effect on the number of workstationssold? 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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Answered: A manufacturer of computer workstations…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4: Estimating Demand

Section: Chapter Questions

Problem 5E

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