Dep. Var.: Qd R-Square F-Ratio P-value on F Obs.: 750 0.8865 165.81 0.0001 Varia
ID: 1107138 • Letter: D
Question
Dep. Var.: Qd
R-Square
F-Ratio
P-value on F
Obs.: 750
0.8865
165.81
0.0001
Variable
Para. Est.
Std. Err.
T-Ratio
P-value
Intercept
2451.69
216.321
11.33
0.0001
P
-135.762
27.4501
-4.95
0.0008
I
0.22301
0.09912
2.25
0.0317
PAPL
42.5713
8.71024
4.89
0.0001
PSSG
27.8122
13.1256
2.12
0.0454
N
1.13518
0.631209
1.80
0.0876
T
2.31569
0.824766
2.81
0.0001
P = Price
I = Average Household Income
PAPL = Price of Related Product
PSSG = Price of Related (another) Product
N = Number of Consumers
T = Electronic Taste Preference of Consumers
1. Does the above model have high or low goodness of fit?
1a. Explain.
2. Is the entire model statistically significant?
2a. Explain.
Dep. Var.: Qd
R-Square
F-Ratio
P-value on F
Obs.: 750
0.8865
165.81
0.0001
Variable
Para. Est.
Std. Err.
T-Ratio
P-value
Intercept
2451.69
216.321
11.33
0.0001
P
-135.762
27.4501
-4.95
0.0008
I
0.22301
0.09912
2.25
0.0317
PAPL
42.5713
8.71024
4.89
0.0001
PSSG
27.8122
13.1256
2.12
0.0454
N
1.13518
0.631209
1.80
0.0876
T
2.31569
0.824766
2.81
0.0001
Explanation / Answer
1) The above model have high goodness of fit.
1a) R-square is known as coefficient of determination, is statistical measure of how close the data are fitted or the level of goodness of fit in the regression model. It tell us about how well the independent variables are explaining dependent variables. R-square ranges from 0 to 1, where 0 means no relationship of zero level of goodness of fit and 1 means perfect fit or highest level of goodness of fit. In this case, we have R-square value 0.8865 which is very close to 1 that means it has high level of goodness of fit.
2) Yes, the entire model is statistically significant.
2a) In this case, we can see that the P-value on F is 0.0001 which means calculated probability or the probability of finding the observed or more extreme, when Null hypothesis is true. This shows that model is very significant due to low P-value it has. It is significant at 1% level of significance.
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