2. The following linear demand specification is estimated for Conlan Enterprises

Question

2. The following linear demand specification is estimated for Conlan Enterprises, a price-setting firm wbere Q is the quantity demanded of the product Conlan Enterprises sells, P is the price of that product, Mis income, and Pis the price of a related product. The results of the estimation are presented below: P-VALUE ON F R-SQUARE 0.7984 PARAMETER STANDARD ESTIMATE 846.30 -8.60 0.0184 -4.3075 DEPENDENT VARIABLE: Q F-RATIO OBSERVATIONS: 32 36.14 0.0001 VARIABLE ERROR 76.70 2.60 0.0048 1.230 T-RATIO P-VALUE 11.03 -3.31 3.83 -3.50 0.0001 0.0026 0.0007 0.0016 INTERCEPT PR Given the above, at the 1% level of significance, which estimates are statistically significant? a All are statistically significant All but åare statistically significant C. Only â, b, and Care statistically significant d Only å is statistically significant All but b and d are statistically significant

Explanation / Answer

Option a - All are statistically significant

Since P value of all the estimates is less than 0.01 it implies that they are significant at 1% level.

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