I AM IN NEED OF THE STEPS TO FIGURE OUT THE FOLLOWING PROBLEM. Just The Fax, Inc
ID: 1229842 • Letter: I
Question
I AM IN NEED OF THE STEPS TO FIGURE OUT THE FOLLOWING PROBLEM.Just The Fax, Inc. (JTF) has hired you as a consultant to analyze the demand for its line of telecommunications devices in 35 different market areas. The available data set includes observations on the number of thousands of units sold by JTF per month (QX), the price per unit charged by JTF (PX), the average unit price of competing brands (PZ), monthly advertising expenditures by JTF (A), and average gross sales (in $1,000) of businesses in the market area (I). The results of a regression analysis (with standard errors in parenthesis) are given below.
QX = 300 - 6 PX + 2 PZ + 0.04 A + 0.01 I
(200) (1.8) (0.8) (0.03) (0.004)
R2 = 0.91 S.E.E. = 3.6
(i) Evaluate the statistical significance of the equation as a whole and of each of its coefficients.
Explanation / Answer
In this case, we know the whole equation is statistically significant based on our value of R^2. In our case, it is above .9 therefore, our data points explain more than 90% of the model which is very significant. Next we look at the standard error of our equation. The first is the intercept which has a very high SE and this is never significant in an econometric model. We need to look for SERelated Questions
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