Econ249 chapter 5 Question: 1-what is the relationship between price and sales?(

Question

Econ249

chapter 5

Question:

1-what is the relationship between price and sales?(positive, negative)

2if the price goes up one unit(dollar) what is the change in sales (POUNDS)?

3. AT A PRICE OF $3.5 WHAT IS THE PREDICTED SALES?

4.in the results-analysis of variance table, what percent of the total ss(sum of squared deviations from the mean) is in the model?

5.what statistic reflects this?

6. interpret this statistic.

7. Looking at the boxplot do you see any outliers?

8 if so? what is the x-value(price) associated with this outlier?

9. how has the correlation coefficient changed by removing the outlier?

10. how has the r-squared changed?

11.is the model more useful now? why?(in terms of ss in the residuals(errors) as a percent of total ss)

12. looking at the regression of residuals va. price, does the data satisfy the equal spread condition? why?

13. looking at the regression of residuals vs. sales, what relatioship do you see there?(positive, negative)

14. what can you say about the usefulness of the model at higher sales leveals?

15 looking at the r-squared of the original data, would you say this is a useful model for prediction sales based on price.

Sales Price 58224 3.57 64889 3.094 54003 3.528 35426 4.018 51860 3.458 45677 3.556 35731 3.962 45730 3.654 48657 3.808 56030 3.556 60742 3.388 37597 3.752 54554 3.514 59119 3.402 53555 3.5 48798 3.458 46896 3.612 48527 3.64 62879 3.304 51770 3.528 51341 3.626 64764 3.318 45751 3.85 50569 3.5 48290 3.794 46650 3.71 63204 3.542 81700 3.626 47658 4.144 55915 3.906 52264 3.738 42410 3.738 56376 3.808 64599 3.654 43033 4.172 39375 3.85 40362 4.158 75783 3.416 64473 3.85

Explanation / Answer

1) When the price of a product increases quantity demanded decreases and hence the sales of the product decreases, when it's price decreases the quantity demanded increases and hence the sales of the product also increases.

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