The Pilot Pen Company has decided to use 15 test markets to examine the sensitiv
ID: 3024332 • Letter: T
Question
The Pilot Pen Company has decided to use 15 test markets to examine the sensitivity of demand for its new product to various prices, as shown in the following table. Advertising effort was identical in each market. Each market had approximately the same level of business activity and population.
Using a linear regression model, estimate the demand for function for Pilot’s new pen.
Evaluate this module by computing the coefficient of determination and by performing a t-test of the significance of the price variable.
What is the price elasticity of demand at a price of 0.50 cents?
Test Market
Price Charged (¢)
Quantity Sold (1,000)
1
50
20.0
2
50
21.0
3
55
19.0
4
55
19.5
5
60
20.5
6
60
19.0
7
65
16.0
8
65
15.0
9
70
14.5
10
70
15.5
11
80
13.0
12
80
14.0
13
90
11.5
14
90
11.0
15
40
17.0
Test Market
Price Charged (¢)
Quantity Sold (1,000)
1
50
20.0
2
50
21.0
3
55
19.0
4
55
19.5
5
60
20.5
6
60
19.0
7
65
16.0
8
65
15.0
9
70
14.5
10
70
15.5
11
80
13.0
12
80
14.0
13
90
11.5
14
90
11.0
15
40
17.0
Explanation / Answer
Sol)
Th Regression equation is
y=a+bx
From Excel
The fitted Regression is y= 28.91 -0.19105 (Price)
B) The coefficient of determination R2 = 0.7408
SUMMARY OUTPUT Regression Statistics Multiple R 0.860688 R Square 0.740784 Adjusted R Square 0.720844 Standard Error 1.73768 Observations 15 ANOVA df SS MS F Significance F Regression 1 112.1794 112.1794 37.15124 3.81E-05 Residual 13 39.25393 3.019533 Total 14 151.4333 Coefficients Standard Error t Stat P-value Lower 95% Intercept 28.9154 2.096432 13.79268 3.87E-09 24.38634 Price Charged (¢) -0.19105 0.031345 -6.09518 3.81E-05 -0.25877Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.