Lebanese American University Beirut — Campus Business Economics Dr. Abdallah Dah Mid-Term Name: ID:I. Henry Dan is a researcher for Hugo University, a small private school in Wego, Obi. Using Togrossion analysis, he estimated the following demand equation for enrollment at Hugo. 2294 50P,A8P,6P,t5E+15R+9N+200 Dr: Dan determined that the number of new freshman entering Hugo in the fall (Q,) depends on the annual tuition and housing costs at Hugo measured in $1,000s (P,), the annual tuition and housing costs at Fyego College (Pp) and Wego State University (P,), Hugo's chief competitors for local students, measured in $1,000s, regional per eapita annual ineome measured in $1,000s (D, the financial aid rebate at Hugo measured as a percentage of tuition revenue (R), the number of stadents who graduated from locdl high schools in the previous spring measured in 1,000s (N), and the number of games won in the previous season, by Hugo's football team (G), Hugo, Eyngo, and Wogo are eurratly charging $14,000, $15,000, at-96;000; respectively, for tuition and bousing. Por capita incamo in the rogion is $11,000 and 90,000 students are expected to graduate from local bigh schools this spring. Hugo's financial aid‘rebats is"25% and the football foam won 5 games last season, How many new freshmen should Hugo expect in the fal? b)} Give the economic interpretations of the estimated coefficients.TL Suppose Yis related to R and § in the following nonlinear way: Year’s* In order to estimate the parameters a, 8, and c, the equation must be transformed into the form: ‘Twenty-six observations are used to obtain the following regression results: DEPENDENT VARIABLE: LNY — R-SQUARE —F-RATIO. © P-VALUE ON OBSERVATIONS: 28 0.3647 424 0.0170 PARAMETER STANDARD VARIABLE ESTIMATE ERROR T-RATIO. P-VALUE INTERCEPT 2.9957 084s 245 0.0001 UN 234 087 2.69 0134 ENS -0.887 0.334 22.08 0.0547. There are_2.3__ degrees of freedom for the ¢-test. At the 1% level of significance, the critical t-value for the test is Gs, is no) At the 1% level of significance, & (is, is not) significant, 5. significant, and 8 (is, is not) significant, ‘The estimated value ofais_ ‘The p-value for 5 indicates that the exact level of significance is __ percent, ‘which is the probability of At the 1% level of significance, the critical value of the statistic is . The model as a whole {s not) significant atthe 1% level. TER equals 12 and S equals 30, the fitted (or predicted) value of Yis, ‘The percentage of the total variation in the dependent varixble’NOTexplained by the regression is IER increases by 14%, Ywill increase by % A6.87% increase in ¥ will occur if S increases, decreases} by percent,TH: Metropottian spltal has estinated its average monthly bed needs 23 N= 1,000 + 9x ‘where X= tme petiod (months); January 1996= 0 1N = monthly bed needs ‘Assume that no new hospital addicions are expected in the area in the foreseeable future, The following monthly seasonal adjustment factors have been estimated, using data from the past five years: Month ‘Adjastment Facior Jamony 8 Apsil “1% July + November 38 Decenber 23%. 1, Forecast Metropolitan's bed demand for: January, April, July, November, and December of 1998, Uf the following actuel and forecast values for June bed demands have been recorded, what seasonal adjustment factor would you recommend be used in raking future Jone forecasts? 1996 ~*~ 08S 1995 937 993 1994 a9 oor 1993 m BL 192, 3 8IV- A fina has experienced the demand shown inthe table below over the past en years. ed Hear. "Exponential Expostettad Movtig Moving Smoothing Sticcthing_ Yer Demand Arenage Average Gre oF Gr= ay 1956 600 — a woe ad 199t 5. oo roo So eso 1992 900 oor cme - - 399s” 1025 mo - - - 084 use oor _ - - 1995 1160 - - - = 1996 1200 i = i ae asor usa i = - = Los L270 - ae - za 1999 1s - ~ - ~ 2000 . i He a a Fill in the table above by preparing forecasts based on a five-year moving average, a three-year moving average, and exponential smoothing (with a w= Sandan = 3).‘V- The estimated demand fora good is. * G=4,800-16P-0.65¢-157, . Were Os the quantity demanded ofthe good, Ps the price ofthe good, Mis income, and Ps is he price of related good Senne of he Boos ® Sood, Mis i a) The coeffisiént on P 2 violates the law of demand, {negative as dictated by the law of demand, & __sotld not be greater than one (in absolute value), 4. should have the same sign a the coefficient on P & . bothe and d 'b) The good is i | _ snfetior good sinc the coefficient on Fy is negative, 6. anormal good since the coefficient on , is negative, o & normal good since the coefficient on M is greater than one-inabsolute value). 4 an inferior good since the coefficient on Mis negative. 8 one of the above ¢) This good and good Rare eee a. complements since the confciont on M's negative &. substitutes since the coeffiiet on Mis negative, &. “Complements since the coeffcienton P, is negative. 4. substitutes since the coefficient on P; is negative. e. ‘hone of the above 4) Ieincome decreasts ‘by $2,000, all else constant, quantity demanded will by units, a ‘increase; 1.30 units b decrease; 6.5 units c increase; 1,300 units 4. decrease; 65 units ©) Ifthe price of the good rises by $10, all else constant, the quantity demanded will by units, ‘increase; 16 units b, decreases 160 units & decrease; 1.5 units increase; 150 units\Vi- A consulting firm estimates the following quart sles forecasting model: “Guasbeeed ‘The equation i estimated using quately data from 199LE-200LUI7(¢= 1... 43). The variable D is a dummy vaciable fo the second quater whore: D= 1 in the second quarter, and 0 otherwise, The results of the estimation ate: DEPENDENT VARIABLE: QT —-R-SQUARE —-F-RATIO. _._P-VALUEONF. OBSERVATIONS: 43 0.8844 1278 o.0001 vasuoLE einai EERE? eraro p-value INTERCEPT 2s 932 2at o.ne0t t 428 0.58 asa 0.0018 o 20 ort 28200075 a) Attthe 1 percent level of significance, is there a statistically significant trend in sales? a. b ce d. No, since 1.86 < 2704 No, since 0.55 < 186 No, since 1.02 <2.704 ‘Yes, since 1.86> 0.55 ‘Yes, since 3.38> 2,704 b) Atthe 1 percent level of significance, is there a statistically significant trend! in:sales? a. b a a 8 ‘Yes, because 0.0016 <0.01, No, because 0.0016 <0.01, Yes, becauss 0.55 > 0.01. Yes, becauso 1.86> 0.01. doth eand d ©) These estimates indicate that the seconid quarter change in sales ig a b. e a 22.5 units higher in the second quarter than in the other three quarters. 1.86 units higher in the second quarter than in the other three quarters. 2.00 units higher inthe second quarter than in the other three quarters, 24.5 units higher in the second quarter than in the other three quarters. 4) Whatis the éstimated intercept of the trend line in the second quarter? Pp b 22.50 24.50 2436 2.00 “none of the above ¢) What is the estimated intercept of the trend line in the third quarter? 2 b 4 22.50 24:50 2436 2.00 fone of the above1) Using the estimated trend line, whats the predicted level of sales in 200L17'? a 110.06 b 106.20 & 10434 da 1022 ® none of the above 1g) Using the estimated trend lino, whats the predicted level of sales ia 20022 a 110.06 b. 106.20 10434 4d 1022 & none of the above