Big Andy's Burger Farm

sales price advert

1 73.20 5.69 1.3 Legend:
2 71.80 6.49 2.9 sales
3 62.40 5.63 0.8 price
4 67.40 6.22 0.7 advert
5 89.30 5.02 1.5
6 70.30 6.41 1.3
7 73.20 5.85 1.8
8 86.10 5.41 2.4
9 81.00 6.24 0.7
10 76.40 6.2 3
11 76.60 5.48 2.8
12 82.20 6.14 2.7
13 82.10 5.37 2.8
14 68.60 6.45 2.8
15 76.50 5.35 2.3
16 80.30 5.22 1.7
17 70.70 5.89 1.5
18 75.00 5.21 0.8
19 73.70 6 2.9
20 71.20 6.37 0.5
21 84.70 5.33 2.1
22 73.60 5.23 0.8
23 73.70 5.88 1.1
24 78.10 6.24 1.9
25 75.70 5.59 2.1
26 74.40 6.22 1.3
27 68.70 6.41 1.1
28 83.90 4.96 1.1
29 86.10 4.83 2.9
30 73.70 6.35 1.4
31 75.70 6.47 2.5
32 78.80 5.69 3
33 73.70 5.56 1
34 80.20 6.41 3.1
35 69.90 5.54 0.5
36 69.10 6.47 2.7
37 83.80 4.94 0.9
38 84.30 6.16 1.5
39 66.00 5.93 2.8
40 84.30 5.2 2.3
41 79.50 5.62 1.2
42 80.20 5.28 3.1
43 67.60 5.46 1
44 86.50 5.11 2.5
45 87.60 5.04 2.1
46 84.20 5.08 2.8
47 75.20 5.86 3.1
48 84.70 4.89 3.1
49 73.70 5.68 0.9
50 81.20 5.83 1.8
51 69.00 6.33 3.1
52 69.70 6.47 1.9
53 78.10 5.7 0.7
54 88.00 5.22 1.6
55 80.40 5.05 2.9
56 79.70 5.76 2.3
57 73.20 6.25 1.7
58 85.90 5.34 1.8
59 83.30 4.98 0.6
60 73.60 6.39 3.1
61 79.20 6.22 1.2
62 88.10 5.1 2.1
63 64.50 6.49 0.5
64 84.10 4.86 2.9
65 91.20 5.1 1.6
66 71.80 5.98 1.5
67 80.60 5.02 2
68 73.10 5.08 1.3
69 81.00 5.23 1.1
70 73.70 6.02 2.2
71 82.20 5.73 1.7
72 74.20 5.11 0.7
73 75.40 5.71 0.7
74 81.30 5.45 2
75 75.00 6.05 2.2

5.6872 1.844
Monthly sales revenue ($1000s)
A price index for all products sold in a given month
Expenditure on advertising ($1000s)

a. Present the Scatter Plots

b. State the Regression Model/ Equation
c. Interpret the Betas/ Coefficients
d. Compute and Analyze the Elasticities
e. Determine the Model of Significance
f. What is the Sales of burger if price is 8.5 and advert is 4? No need to include one or more variables that are insignificant
g. Given your regression results, how would you sell more burgers?

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.6695205465219
R Square 0.4482577622149
Adjusted R Square 0.4329315889431
Standard Error 4.88612397068
Observations 75

ANOVA
df SS
Regression 2 1396.5389297732
Residual 72 1718.9429368934
Total 74 3115.4818666667

Coefficients Standard Error

Intercept 118.91361040087 6.3516375062452
price -7.907854327122 1.0959930220619
advert 1.8625842706067 0.683195473785

A.
100.00

90.00

80.00

70.00

60.00
Sales

50.00

40.00

30.00

20.00

10.00

0.00
4.6 4.8 5 5.2 5.4 5.6 5.8 6 6.2 6.4 6.6
 Sales
50.00

40.00

30.00

20.00

10.00

0.00
4.6 4.8 5 5.2 5.4 5.6 5.8 6 6.2 6.4 6.6
Price

B.
Y' = 118.91 - 7.91 Price + 1.86 Padvert

C.
The price shows a negative coefficient which means that as price changes, the sales changes in the opposite direction.
The advertisement shows a positive coefficient which means that as advertisement expenditure changes, the sales change

D.
Suppose: Price = 5.69 Y = 118.91 - 7.91 Price + 1.86 Advert
Advert = 1.84 Y = 118.91 - 7.91 (5.69) + 1.86 (1.84)
Y = 77.32

E.
T-test
df = n-k-1
df= 75-2-1 = 72

Rule of 2
Price = 4.424E-10 = 0.0000000004424 (Significant) (4.424E-10 < 0.05)
Advertisement = (0.0080382 < 0.05) = significant

R Squared = 44.83% of the variability of Sales is explained by the equation based on price and advertisment expenditure.

F-test
Significance F = 5.04086E-10 = 0.000000000504086
(5.04086E-10 < 0.05) = SIGNIFICANT

F.

Y' = 118.91 - 7.91 (8.5) + 1.86 (4)

= 118.91 - 67.235 + 7.44
= 59.115 / 59,115

G.
Given the regression result, in order to sell more burgers, I would be more vigilant in terms of my pricing/ I would sell my p
price equilibrium. I would also engage more in advertising since it has shown in the table that advertisement has a positive
the more I advertise, it would help increase the sales of the burger.
r more variables that are insignificant

MS F Significance F
698.269464886617 29.24785948 5.040856697E-10
23.8742074568532

t Stat P-value Lower 95% Upper 95% Lower 95.0%

18.7217249542269 2.21429E-29 106.2518524435 131.575368358 106.25185244353
-7.21524149145114 4.424E-10 -10.09267648592 -5.7230321683 -10.09267648592
2.72628309477468 0.008038182 0.500658984708 3.22450955651 0.5006589847079

100.00
90.00
80.00
70.00

60.00
Sales

50.00
40.00
30.00
20.00
10.00
0.00
0 0.5 1 1.5 2 2.5 3 3.5
 Sales
50.00
40.00
30.00
20.00
10.00
0.00
0 0.5 1 1.5 2 2.5 3 3.5
Advert

changes in the opposite direction.

expenditure changes, the sales changes in the same direction.

5.69/77.32
Price Elasticity = -7.91 x = -0.582

Advert Elasticity = 1.86 x 1.84/77.32 = 0.044

Price Elasticity = -7.91 x 5.69/77.32 = -0.582

price and advertisment expenditure.

terms of my pricing/ I would sell my products according to its

able that advertisement has a positive coeffecient which means that
 Upper 95.0%
131.57536835822
-5.723032168326
3.2245095565054
 q pb pl pr i
1 81.7 1.78 6.95 1.11 25088 Legend:
2 56.9 2.27 7.32 0.67 26561 q
3 64.1 2.21 6.96 0.83 25510 pb
4 65.4 2.15 7.18 0.75 27158 pl
5 64.1 2.26 7.46 1.06 27162 pr
6 58.1 2.49 7.47 1.1 27583 i
7 61.7 2.52 7.88 1.09 28235
8 65.3 2.46 7.88 1.18 29413
9 57.8 2.54 7.97 0.88 28713
10 63.5 2.72 7.96 1.3 30000
11 65.9 2.6 8.09 1.17 30533
12 48.3 2.87 8.24 0.94 30373
13 55.6 3 7.96 0.91 31107
14 47.9 3.23 8.34 1.1 31126
15 57 3.11 8.1 1.5 32506
16 51.6 3.11 8.43 1.17 32408
17 54.2 3.09 8.72 1.18 33423
18 51.7 3.34 8.87 1.37 33904
19 55.9 3.31 8.82 1.52 34528
20 52.1 3.42 8.59 1.15 36019
21 52.5 3.61 8.83 1.39 34807
22 44.3 3.55 8.86 1.6 35943
23 57.7 3.72 8.97 1.73 37323
24 51.6 3.72 9.13 1.35 36682
25 53.8 3.7 8.98 1.37 38054
26 50 3.81 9.25 1.41 36707
27 46.3 3.86 9.33 1.62 38411
28 46.8 3.99 9.47 1.69 38823
29 51.7 3.89 9.49 1.71 38361
30 49.9 4.07 9.52 1.69 41593

3.08 8.367333 1.251333 32601.8

90

80

70
beer consumed

60

50

40
 90

80

70

Liters of beer consumed

60

50

40

30

20
10

0
1.5 2
litres of beer consumed
price of beer ($)
price of other liquor ($)
price of remaining goods and services (an index)
income ($)

a. Present the Scatter Plots

b. State the Regression Model/ Equation
c. Interpret the Betas/ Coefficients
d. Compute and Analyze the Elasticities
e. Determine the Model of Significance
f. What is the demand/ comsumption of beer if price is 5.5, price of other liquor is 4, price of remaining goods/ service is 2 and
g. Given your regression results, how would you sell more beers?

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.906707056
R Square 0.8221176855
Adjusted R Square 0.7936565151
Standard Error 3.5692189896
Observations 30

ANOVA
df SS MS
Regression 4 1471.9315617683 367.9829
Residual 25 318.48310489834 12.73932
Total 29 1790.4146666667

Coefficients Standard Error t Stat

Intercept 82.158708138 17.961759844 4.57409
pb -23.742600225 5.4294091862061 -4.372962
pl -4.077409697 3.8904890728759 -1.048046
pr 12.924340332 4.1638956165714 3.103906
i 0.0019945593 0.0007759081944 2.570612

A.

90 90

80 80

70 70
beer consumed

60 60
ers of Beer

50 50

40 40
 90 90

80 80

70 70

Liters of beer consumed 60 60

Liters of Beer
50 50

40 40

30 30

20 20

10 10

0 0
1.5 2 2.5 3 3.5 4 4.5 6.5 7 7.5

price of beer P

90 90

80 80

70 70

Liters of beer consumed

Liters of beer consumed

60 60

50 50

40 40

30 30

20 20

10 10

0 0
0.6 0.8 1 1.2 1.4 1.6 1.8 24000 26000 28000 30000 3

price of remaining goods and services

B.
Y' = 82.16 - 23.74 Pbeer - 4.08 Psubstibute + 12.92 Pindex + 0.002income

C.
The price of beer shows a negative coefficient which means that as the price of beer changes, the liters of beer consumed cha
The price of other liquor shows a negative coefficient which means that as the price of other liqour changes, the liters of beer
The price of remaining goods and services shows a positive coefficient which means that as the price of beer changes, the liter
changes in the same direction. Thus, as the price of the remaining goods and services increases, the liters of beer consumed w
The income shows a positive coefficient which means that as the price of beer changes, the liters of beer consumed changes in
Thus, as the income increases, the liters of beer consumed also iincreases and vice versa.

D.
Suppose: Y' = 82.16 - 23.74 Pbeer - 4.08 Potherliquor + 12.92 Pindex +
Price of beer = 3.08 Y = 82.16 - 23.74 (3.08) - 4.08 (8.37) + 12.92 (1.25) + 0.002 (
price of other liquor = 8.37 Y = 82.16 - 73.12 - 34.15 + 16.15 + 65.20
price of remaining goods and services = 1.25 Y = 56.24
income = 32601.8
E.
t-test
df= n-k-1
df=30 - 4- 1 = 25

two-tail = 2.060
one-tail = 1.708
pb = (-4.37 > 1.708) SIGNIFICANT
pl = (-1.05 < 1.708) INSIGNIFANT
pr = (3.10 > 1.708) SIGNIFICANT
i = (2.57 > 1.708) SIGNIFICANT

R Squared = 82.21% of the variability of number of liters of beer consumed is explained by the equation based on price of bee

Rule of 2
pb = (0.000189267029681027 < 0.05) SIGNIFICANT
pl = ( 0.304644742649773 > 0.05) INSIGNIFICANT
pr = (0.00469776538269651 < 0.05) SIGNIFICANT
i= (0.0164922760220482 < 0.05) SIGNIFICANT

F-test
Significance F = 4.77346E-9 = 0.00000000477346
(4.77346E-9 < 0.05) SIGNIFICANT

F.
Y' = 82.16 - 23.74 (5.5) + 12.92 (2) + 0.002 (55,000)
= 82.16 - 130.57 + 25.84 + 110
= 87.43 liters

G.
Given the regression result, in order to sell more beer, I would sell the beer in a more affordable price. If the price of the rema
of beer consumed will be higher. Lastly, if the income is higher the consumer is more capable of buying more beer, thus, this w
price of remaining goods/ service is 2 and income is 55000? No need to include one or more variables that are insignificant

F Significance F
28.8855895950546 4.77345525832E-09

P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%

0.000112389874502 45.1657712635358 119.151645011563 45.16577126354 119.151645011563
0.000189267029681 -34.9246777628902 -12.5605226875615 -34.92467776289 -12.560522687562
0.304644742649773 -12.0900219317021 3.93520253760439 -12.0900219317 3.93520253760439
0.004697765382697 4.3486367799152 21.5000438838539 4.348636779915 21.5000438838539
0.016492276022048 0.000396546420549 0.003592572100061 0.000396546421 0.00359257210006

90

80
70

60
ers of Beer

50

40
 90

80

70
60
Liters of Beer

50

40

30
20

10

0
6.5 7 7.5 8 8.5 9 9.5 10
Price of other liquor

90

80

70
Liters of beer consumed

60

50

40

30
20

10

0
24000 26000 28000 30000 32000 34000 36000 38000 40000 42000 44000
income

changes, the liters of beer consumed changes in the opposite direction. Thus, as the price of beer increases, the liters of beer consumed d
of other liqour changes, the liters of beer consumed changes in the opposite direction. Thus, as the price of other liquor increases, the liter
hat as the price of beer changes, the liters of beer consumed
increases, the liters of beer consumed would also increase and vice versa.
es, the liters of beer consumed changes in the same direction.

Pbeer - 4.08 Potherliquor + 12.92 Pindex + 0.002income Price of beer elasticity = -23.74 x 3.08/56.24 = -1.300
3.08) - 4.08 (8.37) + 12.92 (1.25) + 0.002 (32601.8)
34.15 + 16.15 + 65.20 Price of other liquor elasticity = -4.08 x 8.37/56.24 = -0.607

Price of remaining goods & services elasticity = 12.92 x 1.25/56.24 =

Income elasticity = 0.002 x 32601.8/56.24 = 1.159
 Price of other liquor elasticity = -4.08 x 8.37/56.24 = -0.607

Price of remaining goods & services elasticity = 12.92 x 1.25/56.24 =

Income elasticity = 0.002 x 32601.8/56.24 = 1.159

ed by the equation based on price of beer, other liqour, other remaining goods and services and income.

affordable price. If the price of the remaining goods and services are higher, the number of liters
capable of buying more beer, thus, this will increase the sales of beer.
re insignificant
 the liters of beer consumed decreases and vice versa.
other liquor increases, the liters of beer consumed decreases and vice versa.

56.24 = -1.300

8.37/56.24 = -0.607

sticity = 12.92 x 1.25/56.24 = 0.287

= 1.159
8.37/56.24 = -0.607

sticity = 12.92 x 1.25/56.24 = 0.287

= 1.159
 demand income price temp
1951:03 0.386 78 0.27 41 Legend:
1951:04 0.374 79 0.282 56 demand
1951:05 0.393 81 0.277 63 income
1951:06 0.425 80 0.28 68 price
1951:07 0.406 76 0.272 69 temp
1951:08 0.344 78 0.262 65
1951:09 0.327 82 0.275 61
1951:10 0.288 79 0.267 47
1951:11 0.269 76 0.265 32
1951:12 0.256 79 0.277 24
1952:01 0.286 82 0.282 28
1952:02 0.298 85 0.27 26
1952:03 0.329 86 0.272 32
1952:04 0.318 83 0.287 40
1952:05 0.381 84 0.277 55
1952:06 0.381 82 0.287 63
1952:07 0.47 80 0.28 72
1952:08 0.443 78 0.277 72
1952:09 0.386 84 0.277 67
1952:10 0.342 86 0.277 60
1952:11 0.319 85 0.292 44
1952:12 0.307 87 0.287 40
1953:01 0.284 94 0.277 32
1953:02 0.326 92 0.285 27
1953:03 0.309 95 0.282 28
1953:04 0.359 96 0.265 33
1953:05 0.376 94 0.265 41
1953:06 0.416 96 0.265 52
1953:07 0.437 91 0.268 64
1953:08 0.548 90 0.26 71

84.6 0.2753 49.1

 0.6

0.5

0.4

Demand
0.3

0.2

0.1

0
20 30
per capita consumption of ice cream (pints,0.256 - 0.548)
weekly family income ($, Range 76 - 96)
price of ice cream ($/pint, Range 0.26 - 0.292)
mean temperature (Fahrenheit, Range 24 - 72)

a. Present the Scatter Plots

b. State the Regression Model/ Equation
c. Interpret the Betas/ Coefficients
d. Compute and Analyze the Elasticities
e. Determine the Model of Significance
f. What is the demand/ comsumption of ice cream if income is 60, price is 0.4, and temp is 80? No need to include one or mor
g. Given your regression results, how would you sell more ice creams?

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.847935051766819
R Square 0.718993852014798
Adjusted R Square 0.686570065708813
Standard Error 0.036832697508273
Observations 30

ANOVA
df SS
Regression 3 0.0902505289175
Residual 26 0.0352728377491
Total 29 0.1255233666667

Coefficients Standard Error

Intercept 0.197315071947585 0.270216156571
income 0.003307760439667 0.0011714184991
price -1.044413991938 0.8343573213601
temp 0.003458429738706 0.0004455468933

A.

0.6

0.5
0.6
Demand of ice cream

0.4 0.5

0.4
0.3
Demand

0.3
0.2
0.2
 0.5
0.6

Demand of ice cream

0.4 0.5

0.4
0.3

Demand
0.3
0.2
0.2
0.1
0.1

0 0
75 80 85 90 95 100 0.255 0.26 0.265
Weekly Family Income

Chart Title
0.6

0.5

0.4
Demand

0.3

0.2

0.1

0
20 30 40 50 60 70 80
Temperature

B.
Y' = 0.197 + 0.003 Pincome - 1.044 price + 0.003temp

C.
The income shows a positive coefficient which means that as income changes, the demand of ice cream changes in the same d
Thus, if the income increases, then the demand of ice cream also increases, vice versa.
The price shows a negative coefficient which means that as price changes, the demand of ice cream changes in the opposite d
Thus, if the price increases, the demand of ice cream decreases and vice versa.
The temperature shows a positive coefficient which means that as the temperature changes, the demand of ice cream change
Thus, if the temperature increases, the demand for ice cream increases

D.
Suppose:
Y' = 0.197 + 0.003 Pincome - 1.044 price + 0.003temp
weekly family income = 84.6 Y' = 0.197 + 0.003 (84.6) - 1.044 (0.28) + 0.003 (49.1)
price of ice cream = 0.28 Y' = 0.306
mean temperature = 49.1
E.
t-test
df = n-k-1
df= 30 - 3 - 1 = 26

two-tail = 2.056
one-tail = 1.706
income = (2.82 > 1.706) SIGNIFICANT
price = (-1.25 < 1.706) INSIGNIFICANT
temp = (7.76 > 1.706) SIGNIFICANT

R Squared = 71.90% of the variability of the demand of ice cream is explained by the equation based on income, price and tem

Rule of 2
income = (0.00898872952346872 < 0.05) SIGNIFICANT
price = (0.221802729687183 > 0.05) INSIGNIFICANT
temp = (3.10002418713003E-08 < 0.05) SIGNIFICANT

F-test
Significance F =2.45050416394223E-07 = 0.000000245050416394223
(2.45050416394223E-07 < 0.05) SIGNIFICANT

F.
Y' = 0.197 + 0.003 (60) + 0.003 (80)
= 0.197 + 0.18 + 0.24
= 0.617 pints

G.
Given the regression result, in order to sell more ice cream, I would sell more during hot temperature since the higher the tem
is high also. Likewise, the higher the income the more capable the consumers are at buying ice cream. Thus, the sale of my ice
? No need to include one or more variables that are insignificant

MS F Significance F
0.030083509639 22.1748886829446 2.45E-07
0.001356647606

t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
0.730211969748 0.471789404654785 -0.3581221926811 0.75275234 -0.3581221927 0.7527523366
2.823722215714 0.008988729523469 0.0008998752299 0.00571565 0.0008998752 0.0057156456
-1.25175864728 0.221802729687183 -2.7594600283409 0.67063204 -2.7594600283 0.6706320445
7.762212666179 3.10E-08 0.0025425949832 0.00437426 0.002542595 0.0043742645

Chart Title
0.6

0.5

0.4
Demand

0.3

0.2
 0.6

0.5

0.4
Demand

0.3

0.2

0.1

0
0.255 0.26 0.265 0.27 0.275 0.28 0.285 0.29 0.295
Price

ice cream changes in the same direction.

cream changes in the opposite direction.

the demand of ice cream changes in the same direction.

income elasticity = 0.003 x 84.6/0.306 = 0.829

1.044 price + 0.003temp
44 (0.28) + 0.003 (49.1) Price of ice cream elasticity = -1.044 x 0.28/0.306 = -0.955
temperature elasticity = 0.003 x 49.1/0.306 = 0.481
based on income, price and temperature.

erature since the higher the temperature, the demand for ice cream
e cream. Thus, the sale of my ice cream would increase.
55
 Q Y P ED1 ED2
1960 1.86 2561 1.362 0.112 0.026 Legend:
1961 1.917 2560 1.363 0.125 0.03
1962 1.981 2652 1.361 0.135 0.03 Q
1963 1.937 2840 1.454 0.142 0.032 Y
1964 1.924 2882 1.62 0.147 0.034 P
1965 1.947 2900 1.688 0.148 0.036 ED1
1966 2.039 3167 1.664 0.163 0.04 ED2
1967 1.985 3220 1.76 0.184 0.043
1968 2.018 3350 1.812 0.2 0.047
1969 2.016 3443 1.984 0.217 0.051
1970 2.114 3546 1.996 0.229 0.052
1971 2.144 3826 1.926 0.25 0.053
1972 2.223 4014 1.875 0.264 0.052
1973 2.357 4109 1.869 0.267 0.052
1974 2.574 4304 1.813 0.279 0.052
1975 2.403 4526 2.008 0.287 0.074
1976 2.456 4784 2.148 0.317 0.089
1977 2.517 4869 2.075 0.33 0.092
1978 2.593 4906 2.347 0.337 0.092
1979 2.723 4786 1.875 0.334 0.084
1980 2.347 4638 2.145 0.349 0.067
1981 2.527 4714 2.279 0.34 0.057
1982 2.413 4808 2.392 0.351 0.055
1983 2.346 4844 2.23 0.357 0.063
1984 2.206 5006 2.106 0.373 0.07
1985 2.107 5132 2.714 0.396 0.083
1986 2.014 5409 2.539 0.414 0.091
1987 2.165 5672 2.967 0.432 0.094
1988 2.082 5723 3.968 0.451 0.095

4110.034 2.046207 0.273448 0.059862

Cigarette consumption per adult (kg), 1.86 - 2.72
Per capita real GNP (1968 Turkish Liras), 2560 p 5723
Real price of cigarettes (Turkey Liras per kg, 1.36 - 3.97)
Proportion of 12 - 17 age grp. enrolled in middle and high schools
Proportion of 20 - 24 age grp. enrolled in universities

a. Present the Scatter Plots

b. State the Regression Model/ Equation
c. Interpret the Betas/ Coefficients
d. Compute and Analyze the Elasticities
e. Determine the Model of Significance
f. What is the demand/ consumption of cigarette if Y is 6,000, price is 4, ED1 is 0.7 and ED2 is 1? No need to include one or mo
g. Given your regression results how would you sell more cigarettes?

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.83787410886525
R Square 0.70203302230673
Adjusted R Square 0.65237185935786
Standard Error 0.14338456115181
Observations 29

ANOVA
df SS
Regression 4 1.1625333747
Residual 24 0.493419177
Total 28 1.6559525517

Coefficients Standard Error

Intercept 0.70797907031028 0.4548361913
Y 0.00095751955485 0.0002916612
P -0.31359053496226 0.1043494994
ED1 -5.86690926917261 2.6411241787
ED2 -3.2206529098991 3.5614134796

A.

Chart Title
3 3
on per adult

n per adult

2.5 2.5

2 2
 Chart Title
3 3
Ciigarette consumption per adult

Cigarette consumption per adult

2.5 2.5

2 2

1.5 1.5

1 1

0.5 0.5

0 0
2000 2500 3000 3500 4000 4500 5000 5500 6000 1 1.5 2
Per capita real GNP

Chart Title
3 3

Cigarette consumption per adult

Cigarette consumption per adult

2.5 2.5

2 2

1.5 1.5

1 1

0.5 0.5

0 0
0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 0.5 0.02 0.03 0.04

Proportion of 12-17 Age Grp. Enrolled in Middle and highschool Proportion of

B.
Y' = 0.708 + 0.001 Y - 0.314 P - 5.867 ED1 - 3.221 ED2

C.
The per capita real GNP shows a positive coefficient which means that as per capita real GNP changes, the cigarette consumpti
Thus, as per capita real GNP increases, the consumption of cigarette per adult also increases.
The real price of cigarette shows a negative coefficient which means that as real price of cigarette changes, the demand of ice
Thus, as real price of cigarette increases, the consumption of cigarette per adult decreases and vice versa.
The proportion of 12-17 age group enrolled in middle and high school shows a negative coefficient which means that as the pr
the cigarette consumption per adult changes in the opposite direction.
Thus, as the proportion of 12-17 age group enrolled in middle and high school increases, the consumption of cigarette per adu
The proportion of 20-24 age group enrolled in universities shows a negative coefficient which means that as the proportion of
the cigarette consumption per adult changes in the opposite direction.
Thus, as proportion of 20-24 age group enrolled in universities increases, the consumption of cigarette per adult decreases.

D.
Suppose: Y' = 0.708 + 0.001 Y - 0.314 P -
Per capita real GNP = 4110.03 Y' = 0.708 + 0.001 (4110.03) - 0
Real price of cigarettes = 2.05 Y' = 2.40
Proportion of 12 - 17 age grp. enrolled in middle and high schools = 0.27
Proportion of 20 - 24 age grp. enrolled in universities = 0.06

E.
t-test
df = n-k-1
df= 29 - 4 - 1 = 24

two-tail test = 2.064

one-tail test = 1.711
Y= ( 3.28298573942471 > 1.711) SIGNIFICANT
P = (-3.00519443632822 > 1.711) SIGNIFICANT
ED1 = (-2.2213682024297 > 1.711) SIGNIFICANT
ED2 = (-0.904318728601542 < 1.711) INSIGNIFICANT

R Squared = 70.20% of the variability of the cigarette consumption per adult is explained by the equation.

Rule of 2
Y = (0.00313950607758582 < 0.05) SIGNIFICANT
P = (0.00612959703608751 < 0.05) SIGNIFICANT
ED1 = (0.0360132211214682 < 0.05) SIGNIFICANT
ED2 = (0.374814912250559 > 0.05) INSIGNIFICANT

F-test
Significance F = 4.61605706722111E-06 = 0.00000461605706722111
(4.61605706722111E-06 < 0.05) SIGNIFICANT

F.
Y' = 0.708 + 0.001 (6000) - 0.314 (4) - 5.867 (0.7)
= 0.708 + 6 - 1.256 - 4.1069
= 1.3451 kg

G.

Given the regression result, in order to sell more cigarettes, I would sell it a fair price since the
consumption of cigarettes and its price has an inverse relationship. It was also indicated that as
the real capita per GNP rises, the consumption of cigarette per adult also rises. Lastly, the result
shows that it would be preferable that the age group would be within the age group of 12-17.
need to include one or more variables that are insignificant

MS F Significance F
0.290633343671 14.1364595716258 4.62E-06
0.020559132377

t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
1.556558347516 0.132665140112298 -0.2307566906765 1.6467148313 -0.230756691 1.6467148313
3.282985739425 0.003139506077586 0.00035556042714 0.0015594787 0.0003555604 0.00155947868
-3.00519443633 0.006129597036088 -0.5289573166336 -0.098223753 -0.528957317 -0.0982237533
-2.22136820243 0.036013221121468 -11.317921662617 -0.415896876 -11.31792166 -0.4158968757
-0.9043187286 0.374814912250559 -10.571049067815 4.129743248 -10.57104907 4.12974324802

Chart Title
3

.5

2
 Chart Title
3

.5

.5

.5

0
1 1.5 2 2.5 3 3.5 4 4.5
Real price of cigarettes

Chart Title
3

2.5

1.5

0.5

0
0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.1
Proportion of 20-24 age grp. Enrolled in Universities

es, the cigarette consumption per adult changes in the same direction.

hanges, the demand of ice cream changes in the opposite direction.

which means that as the proportion of 12-17 age group changes,

mption of cigarette per adult decreases.

s that as the proportion of 20-24 age group changes,

tte per adult decreases.

0.708 + 0.001 Y - 0.314 P - 5.867 ED1 - 3.221 ED2
0.708 + 0.001 (4110.03) - 0.314 (2.05) - 5.867 (0.27) - 3.221 (0.06)

Per capita real GNP elasticity = 0.001 x 4110.03/2.40 = 1.713

Real price of cigarette elasticity = -0.314 x 2.05/2.40 = -0.268

Proportion of 12-17 age grp. elasticity = -5.867 x 0.27/2.40 = -0.660
Proportion of 20-24 age grp. elasticity = -3.221 x 0.06/2.40 = -0.081
 motel_pct motel_rate comp_rate repair
2003:03 66.7 54.81 71.63 0
2003:04 95.6 53.59 74.21 0
2003:05 95.8 53.37 74.57 0
2003:06 96.2 53.83 77.66 0
2003:07 94.5 56.83 83.7 0
2003:08 89.2 58.5 81.32 0
2003:09 85.2 59.19 70.03 0
2003:10 73.7 58.62 72.73 0
2003:11 66 55.74 72.05 0
2003:12 71.8 54.61 67.45 0
2004:01 62.9 54.9 68.57 0
2004:02 68.8 55.44 71.46 0
2004:03 78.8 55.88 70.57 0
2004:04 77.4 56.13 73.5 0
2004:05 82.8 56.13 77.07 0
2004:06 84.9 59.43 83.52 0
2004:07 73.8 55.18 83.36 1
2004:08 82.4 57.66 79.78 1
2004:09 77.1 53.52 77.86 1
2004:10 80.4 53.16 78.62 1
2004:11 64.7 57.05 78.31 1
2004:12 45.2 59.69 77.71 1
2005:01 39.2 60.01 78.23 1
2005:02 63.7 58.34 77.95 0
2005:03 74.3 60.15 78.05 0

56.4704 75.9964 0.28

Legend:
motel_pct percentage motel occupancy
motel_rate motel room rate, $
comp_rate competitors room rate, $
repair = 1 if motel under repair, = 0 otherwise

a. Present the Scatter Plots

b. State the Regression Model/ Equation
c. Interpret the Betas/ Coefficients
d. Compute and Analyze the Elasticities
e. Determine the Model of Significance
f. What is the % motel occupancy if motel rate is 50, competitor's rate is 90 and the motel is under repair?
g. Given your regression results, how would you increase the % occupancy of the motel?

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.76528993909
R Square 0.58566869088
Adjusted R Square 0.52647850386
Standard Error 9.93371806295
Observations 25

ANOVA
df SS MS
Regression 3 2929.1877543604 976.39591812
Residual 21 2072.2538456396 98.678754554
Total 24 5001.4416

Coefficients Standard Error t Stat

Intercept 132.435532985 55.224570352916 2.3981269956
motel_rate -3.3972450919 0.9336873857717 -3.638525211
comp_rate 1.85308670221 0.5041540054954 3.6756361786
repair -20.627364297 4.9172014112646 -4.19493988

A.

Chart Title
120
120
rcentage motel occupancy
centage Motel occupancy

100
100

80 80

60 60

40 40

20 20
 120
120

Percentage motel occupancy

Percentage Motel occupancy
100
100

80 80

60 60

40 40

20 20

0 0
52 53 54 55 56 57 58 59 60 61 66
Motel rate

Chart Title
120
Percentage Motel Occupancy

100

80

60

40

20

0
0 0.2 0.4 0.6 0.8 1 1.2
Repair

B.
Y' = 132.44 - 3.40 mrate + 1.85 crate - 20.63 repair

C.

The motel rate shows a negative coefficient which means that as motel rate changes, the percentage mote
occupancy changes in the opposite direction. Thus, as the motel rate increases, the percentage of motel o
decreases and vice versa.

The competitors room rate shows a positve coefficient which means that as the competitors room rate ch
percentage of motel occupancy changes in the same direction. Thus, if the competitors room rate increase
percentage occupancy of the motel also increases.
The repair shows a negative coefficient which means that as the repair changes, the percentage motel occ
changes in the opposite direction. Thus, as the repair increases, the percentage of motel occupancy decre
vice versa

D.

Suppose: Y' = 132.44 - 3.40 mrate + 1.85 crate - 20.63 repair

motel room rate = 56.47 Y' = 132.44 - 3.40 (56.47) + 1.85 (75.10) - 20.63 (0.28)
competitors room rate = 75.10 Y'= 73.60
repair = 0.28 motel room rate elastic

Competitors room rate

repair elasticity = -20.63

 motel room rate elastic

Competitors room rate

repair elasticity = -20.63

E.
t-test
df = n-k-1
df = 25 - 3 -1 = 21

two-tail test = 2.080

one-tail test = 1.721
mrate = (-3.63852521054903 > 1.721) SIGNIFICANT
crate = ( 3.67563617864855 > 1.721) SIGNIFICANT
repair = ( -4.19493987983685 > 1.721) SIGNIFICANT

R Squared = 70.20% of the variability of the cigarette consumption per adult is explained by the equation.

Rule of 2
mrate = (0.0258513674511483 < 0.05) SIGNIFICANT
crate = (0.00140719948341272 < 0.05) SIGNIFICANT
repair = (0.000407671865949752 < 0.05) SIGNIFICANT

F-test
Significance F = 0.000286337478539283
( 0.000286337478539283 < 0.05) SIGNIFICANT

F.
Y' = 132.44 - 3.40 (50) + 1.85 (90) - 20.63 (1)
= 132.44 - 170 + 166.5 - 20.63
= 108.31 %

G.

Given the regression result, in order to increase the percentage of the occupancy of the motel,
I would offer a motel rate that is lower compared to my competitors. I will make sure that my
motel rooms will be in a good condition so that my expendture in repairs would be minimized.
Thus, increasing the percentage occupancy of the motel.
motel is under repair? No need to include one or more variables that are insignificant

F Significance F
9.8946923533 0.000286337479

P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%

0.0258513675 17.58975191013 247.28131406 17.5897519101 247.28131406025
0.0015366952 -5.338954306 -1.4555358778 -5.338954306 -1.4555358778035
0.0014071995 0.804641052506 2.90153235191 0.80464105251 2.9015323519127
0.0004076719 -30.85324442948 -10.401484165 -30.8532444295 -10.401484165124

Chart Title
120
rcentage motel occupancy

100

80

60

40

20
 120

Percentage motel occupancy

100

80

60

40

20

0
66 68 70 72 74 76 78 80 82 84 86
Competitors room rate

es, the percentage motel

he percentage of motel occupancy

mpetitors room rate changes, the

titors room rate increases, the

he percentage motel occupancy

f motel occupancy decreases and

20.63 repair
) - 20.63 (0.28)

otel room rate elasticity = -3.40 x 56.47/73.60 = -2.609

ompetitors room rate elasticity = 1.85 x 75.10/73.60 = 1.888

pair elasticity = -20.63 x 0.28/73.60 = -0.078

otel room rate elasticity = -3.40 x 56.47/73.60 = -2.609

ompetitors room rate elasticity = 1.85 x 75.10/73.60 = 1.888

pair elasticity = -20.63 x 0.28/73.60 = -0.078

ained by the equation.

of the motel,
re that my
minimized.