Agnes, a General Manager in XXX Company, estimated a multiplicative demand function of the form: using a cross-section data collected in the company sales on 30th June, 2019. The estimation results are as follows: (SEE IMAGE)Write down the estimated demand equationInterpret the coefficients and R2 valueDescribe any three managerial decisions that can be applied by the manager from the estimated demand function ConstantPrice (P)Income (I) Price of Other Good (PO)Estimated coefficien0.022-0.2231.3540.133Standard Error0.0120.0560.5020.814t-statistic(1.19)(-3.98)-2.69-0.13Number of Observations, n = 210; R-squared = 0.7516Critical Students't= 1.96 at 5% Level of Signi ficance

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Agnes, a General Manager in XXX Company, estimated a multiplicative demand function of the form: using a cross-section data collected in the company sales on 30th June, 2019. The estimation results are as follows: (SEE IMAGE)

Write down the estimated demand equation
Interpret the coefficients and R² value
Describe any three managerial decisions that can be applied by the manager from the estimated demand function

Constant
Price (P)
Income (I) Price of Other Good (PO)
Estimated coefficien
0.022
-0.223
1.354
0.133
Standard Error
0.012
0.056
0.502
0.814
t-statistic
(1.19)
(-3.98)
-2.69
-0.13
Number of Observations, n = 210; R-squared = 0.7516
Critical Students't= 1.96 at 5% Level of Signi ficance

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