Twelve cities were surveyed to estimate the demand or consumption for hamburgers

Question

Twelve cities were surveyed to estimate the demand or consumption for hamburgers. The consumption of hamburgers was hypothesized to be a function of hamburger price, income, and the price of hot dogs.

1. What are the expected signs of the estimated coefficients for price, income and the price of hot dogs, explain each one?

2.   Are the signs what you expected, explain each one?

3. Interpret each of the estimated coefficients. For an example of how to interpret the estimated coefficients, see the paragraph immediately following the results table in the Controlling Quality at SLM: a Regression Example section, in the text

4. Does hamburg price (Hamb Price) have a statistically significant effect on the consumption of hamburgs? Explain using the appropriate p-value.

5. Does income have a statistically significant effect on the consumption of hamburgs? Conduct a t-test and show each of the steps you took to arrive at your conclusion.

6. Does hot dog price have a statistically significant effect on the consumption of hamburgers? Explain using the appropriate p-value.

7. What fraction of the total variation in hamburger consumption is unexplained?

8. If the independent variables take on the following values what would hamburger consumption (demand) be: hamburger price 1.35, income 14 (000), and hot dog price 1.55.

9. What is your evaluation of the overall model? Cite specific numbers from the results table(s) to support your opinion.

10. Besides increasing the number of observations, do you have any suggestions on how to change this model in order to improve the results?

RESULTS OF HAMBURG CONSUMPTION OR DEMAND FOR 12 CITIES USING EXCEL (PC Users) SUMMARY OUTPUT Regression Statistics Multiple R 0.99798148 R Square 0.99596703 Adjusted R Square 0.99445466 Standard Error 1.34247357 Observations 12 ANOVA df SS MS F Significance F Regression 3 3560.582118 1186.861 658.5493 6.49981E-10 Residual 8 14.41788223 1.802235 Total 11 3575 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept 176.270935 45.28993704 3.892055 0.004596 71.83215252 280.7097 71.83215 280.7097 Hamb Price -106.69008 15.52316904 -6.87296 0.000128 -142.486569 -70.8936 -142.487 -70.8936 Income (1,000s) 4.56509995 1.806029906 2.527699 0.035382 0.400387515 8.729812 0.400388 8.729812 Hot Dog Price -12.155592 20.97372876 -0.57956 0.578161 -60.5210968 36.20991 -60.5211 36.20991 RESIDUAL OUTPUT Observation Predicted Hamb Consump Residuals 1 49.136953 0.863047002 2 78.2225824 1.777417612 3 93.7592292 1.240770755 4 104.874392 0.12560778 5 70.454259 -0.454258959 6 84.6213758 0.378624167 7 56.2871421 -1.287142085 8 61.621646 -1.621645957 9 75.3322528 -0.332252836 10 90.8688997 -0.868899694 11 101.222312 -1.222312264 12 63.5989555 1.40104448

Explanation / Answer

1) The coefficient for price of hamburger is expected to have negative sign because as price increases    quantity demanded decreases.

The coefficient of income is expected to be positive because as income increases people demand more of a good.

The coefficient of price of hot dog is expected to be positive because the two are substitutes and for substitute goods demand increases for increase in price of other goods.

2) No, the coefficient of price of hot dog is negative which was expected to be positive.

3) The coefficient of price of hamburger suggests that if the price of hamburger increases by one dollar the demand on an average will decrease by 106.69 units.

The coefficient of income tells that if increase by one thousand the demand on average will increase by 4.56 units.

The coefficient of hot dog price increases by one dollar demand for hamburger will fall by 12.15 units.

4) Yes price of hamburger have significant effect on demand for hamburger because the p-value is very small. This implies that we reject the null hypothesis of no impact of price of hamburger on its demand.

*We are suposed to do only four sub-parts to question. For solution to other parts please post as a different question. Please upvote if possible.

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