[DATE]

ECONOMICS PRINCIPLES
& DECISION MAKING
MODULE5. ASSESSMENT 2
Problem A
Linear Regression Analysis:
linear regression analysis is completed over the data provided in Table 1 – Survey results for
Atollia, in order to investigate the potential impact of offering the energy bars to another
store. For the purpose of analysis, energy bars are sold per person is considered Y (dependant
variable) on the assumption that the sales are due to the location of 15 stores there. Stores
therefore are considered to be independent variable X and the results of the calculation are as
follows.

R Square: shows the dependency percentage of bars on the stores.

No. of stores with energy bars Avg. demand for number of stores
15 94.4
16 101.4
17 97
20 127.7
23 152.7
APPENDIX#2
In this summary the person income is associated with the consumption in the energy bar as
increase in the income will increase the person ability to buy the energy bar.

APPENDIX#3
Problem B
In appendix 1, Square R shows that 72% is the level of dependency for the variation in the
quantity of energy bars sold can be explainable by the independent variables which is the
stores in our analysis.
In order to check out the reliability of our results over the regression analysis the Significance
represents Ok if it is lesser than 0.05 and is representing a hint to stop using the current set of
dependant variables. While in our case this is 1.29853E-06 showing not to use the same set
again. Instead would need to delete a variable with high p-value.
In our analysis, Intercept is having a high p-value.

  Coefficients
Intercept -15.761
X Variable 1 7.217
This shows for if another store is in place, the regression line suggests that the consumption
of energy bars used per person would increase by 7.217.
The regression line is: y = Quantity of energy bars Sold = -15.761* Price + 7.217* stores.

The variables above can also be used to make predictions of changing the number of stores is
increased.

Residuals:
The residuals depict that the way you are far away from the predicted data being in position
of actual data points by the use of equation.

RESIDUAL OUTPUT    
     
Observation Predicted Y Residuals
1 5.440 -0.440
2 5.553 -0.553
3 5.767 -0.767
4 5.947 -0.947
5 6.170 -1.170
6 6.458 -1.458
7 6.725 -1.725
8 6.906 -1.906
9 7.049 2.951
10 7.187 2.813
11 7.343 2.657
12 7.653 2.347
13 7.890 2.110
14 7.939 2.061
15 8.094 1.906
16 8.410 -0.910
17 8.496 -0.996
18 8.715 -1.215
19 8.894 -1.394
 20 9.103 -1.603
21 9.262 -1.762

Scatter graph for Residuals

10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5

Regression Residual

Problem C
Briefing Notes
Benefit of the Free Trade
In modern world the trade between the different countries is becoming barrier free. It has
great impact on the emerging countries and on their economy. It hurts the domestic goods for
a short period but after the innovating and new technology introduced in the country it will
boost the company economy. Free trade is beneficial for the Industria as well as Atollia.
Benefits of the Free Trade For Both countries:
Free trade agreement between Industrai and Atollia will boost their economy in positive
manners as it will lower the cost which is associated with the import and export duty, after
the trade becomes free the cost of the product will be lower and it will be easily accessible to
everyone. Following are the benefits for both countries:
The Atollia is a country which is not much developed and facing energy crisis. By opening
store will be beneficial for both of the countries. The free trade agreement will lower the cost
of the energy bar in that county as it will minimise the heavy cost of export. It will boost the
sale in Atollia as there are energy crisis. This will impact on the tariff as well as people of the
Atollia afford it. This will boost the economy of the Industria as their product is successfully
introduced in Atollia and its demand will also increase.
Introducing energy bar in this country will improve the quality of the product, by competing
with rivals. The price is also reachable to the people of Atollia as there is no export or import
duty on energy bars. Increase in the sale will decrease the tariff cost as well as entering in
new market with high demand and low cost will beneficial for both of the countries.
Benefits for the Industria:
By free trade agreement the energy bar are introduced in the Atollia in low cost. This will
also increase the demand of the product as the price of the energy bar offering by competitors
is high due to high import duties. This will further decrease the cost of the tariff and the
demand will further increase.
The goods which are highly consumed in Industria are import from Atollia and meet the
demand; this will lower the cost of the goods which increased due to increase in the demand
of the goods. Free trade agreement will be beneficial for Industria.

Number of stores where energy bars are offered

158 23
23
158 23
20
143 20
20
109 20
20
115 20
17
102 17
16
82 16
16
109 16
16
91 15
15
93 15
15
106 15
0 5 10 15 20 25

Number of stores where energy bars are offered

Our analysis showed that where the number of stores are more, the more is the number of
consumers on average who consumer the energy bars and when would go ahead for opening
another store there should be a consideration as to the tariff so that the decisions can reflect
the benefits of going for another store by Board of Schmeckt Gut.
The table shows the average income of a person and the tariff as are likely to be based upon
these, if plotted on a graph the appendix below shows the results however, the regression
analysis over these two sets of variables would suggest in detail the level of dependency on
tariff, which is shown in PROBLEM A, Appendix#3.
Average income per Tariff rate on imports of energy
person bars
15500 5
15810 5
16395 5
16887 5
17495 5
18282 5
19013 5
19508 5
19898 10
20276 10
20702 10
21550 10
22197 10
22330 10
22754 10
23619 7.5
23855 7.5
24452 7.5
24941 7.5
25514 7.5
25948 7.5
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