FACULTY OF BUSINESS AND MANAGEMENT

COURSE CODE AND NAME:

ECO558 ECONOMICS FOR BUSINESS AND MANAGEMENT

TITLE:
GROUP ASSIGNMENT:
REGRESSION ANALYSIS

GROUP: D2BA2504A
PREPARED FOR: MADAM WAN HASNI WAN HASAN
PREPARED BY: MATRIK NO:
MUHAMMAD AZRUL BIN AHAMAD 2021829678
NUR FATIHAH BINTI AZIZI 2021871558
NUR NADIRAH AQILAH BINTI YA’ACOB 2021843942
FATINA AINA HUWAIDA BINTI MOHD RAZALI 2022485114

DATE OF SUBMISSION: 4th JULY 2023

 TABLE OF CONTENT

NO CONTENT PAGES

1.0 ABSTRACT

2.0 ACKNOWLEDGEMENT

3.0 CONTENT

3.1 INTRODUCTION & OBJECTIVES

3.2 COEFFECIENT OF EACH VARIABLE

3.3 SIGNS OF THE COEFFICIENT

3.4 T-TEST

3.5 F-TEST

3.6 COEFFICIENT OF DETERMINATION

3.7 ELASTICITY

3.8 CONCLUSION

3.9 RECOMMENDATION

4.0 REFERENCES

5.0 APPENDICES
1.0 ABSTRACT

The studies have shown the total consumption of Mighty Meat local beef in 30 different
regions of country A. This consumption of local beef is said to be influenced by five
variables which are average income per households, population, consumption of imported
beef, total advertisement on imported beef by sellers in the region and average price of
chicken per kilogram. Within that, to analyse the regression, we need to run the data using
EViews known as Econometric Views. EViews is a statistical package for econometric
analysis of time series data. The object-oriented interface of EViews provides financial
institutions, corporations, government agencies, and academics with powerful statistical, time
series, forecasting, and modeling tools. In addition, this group project makes us to know the
sensitiveness between demand and each of the independent variables to understand the
product better. On top of that, we need to suggest whether the model requires improvement or
correction. To fulfil the criteria of the report, we need to make an introduction and the
objectives of the project, state the coefficient value of each variable, identify the signs of the
coefficient, calculate the t-test, f-test, determine the coefficients, elasticity and make some
recommendations to improve the model. We will discuss the demand estimation and the
regression analysis throughout this project.
2.0 ACKNOWLEDGEMENT

In the name of Allah S.W.T The Most Gracious and The Most Merciful. We would
want to offer our heartfelt gratitude to The Almighty God for bestowing upon us the blessings
that enable us to complete this task with zeal.

We would like to offer our heartfelt gratitude to our economics for business and
managements’ lecturer, Madam Wan Hasni Wan Hasan for guiding us in completing this
group assignment project. We would like to give our sincere appreciation for the learning
opportunities that have been provided by her. The time she has given us to finish this
assessment is also plenty for us to come up with some useful suggestions for improving the
project.

We would also like to thank our family and friends for their encouragement, support
and ideas to complete this assessment in time. In addition, we would want to express our
gratitude to everyone who assisted us in any way throughout the creation of this assignment,
both directly and indirectly. We really appreciate the help they have given because without
their help and support all these tasks may not be able to be carried out perfectly.
 3.2 COEFFECIENT OF EACH VARIABLE

Dependent Variable: LOCAL_BEEF_CONSUMPTION

Method: Least Squares
Date: 06/25/23 Time: 22:36
Sample: 1 30
Included observations: 30

Variable Coefficient Std. Error t-Statistic Prob.

AVERAGE_INCOME_PER_HOUSEHOLD 0.043636 0.012167 3.586475 0.0015

POPULATION 0.021915 0.109906 0.199399 0.8436
CONSUMPTION_OF_IMPORTED_BEEF 1.208826 0.705680 1.712994 0.0996
TOTAL_ADVERTISEMENT_ON_IMPORTED
_BEEF -20.26802 31.78908 -0.637578 0.5298
AVERAGE_PRICE_OF_CHICKEN -386.8745 248.8867 -1.554420 0.1332
C 3554.357 1885.049 1.885551 0.0715

R-squared 0.641748 Mean dependent var 4263.300

Adjusted R-squared 0.567112 S.D. dependent var 1093.383
S.E. of regression 719.3825 Akaike info criterion 16.17152
Sum squared resid 12420268 Schwarz criterion 16.45176
Log likelihood -236.5728 Hannan-Quinn criter. 16.26117
F-statistic 8.598398 Durbin-Watson stat 2.439889
Prob(F-statistic) 0.000089

a) Regression equation

LBCons = β₀ + β₁Y + β₂Pop + β₃ConsMBeef - β₄AdMBeef - β₅AvPCh

b) Estimated equation

LBCons = 3554.357 + 0.0436Y + 0.0219Pop + 1.2088ConsMBeef – 20.2680AdMBeef –

386.8745AvPCh

Where:

LBCons: Local Beef Consumption ($)

Y: Average Income Per Households ($)

Pop: Population (‘000)

ConsMBeef: Consumption Of Imported Beef (Kg)

AdMBeef: Total Advertisement On Imported Beef ($’00)

AvPCh: Average Price of Chicken Per Kg ($)

c) Coefficient value

 Y:
$1 increase in the average income per households will increase local beef
consumption by $0.0436 times.

 Pop:
1000 people increase in the population will increase local beef consumption by
0.0219 times.

 ConsMBeef:
1Kg increase in the consumption of imported beef will increase local beef
consumption by 1.2088 times.

 AdMBeef:
$1 increase in the total advertisement on imported beef will decrease local beef
consumption by 20.2680 times.

 AvPCh:
$1 increase in the average price of chicken will decrease local beef consumption by
386.8745 times.
 3.4 T-TEST
T tests are statistical tests used to compare the means of two groups. As a
hypothesis test, it is often used to determine whether a particular procedure or treatment
affects the population of interest, as well as to determine whether two groups differ. T-test is
used to determine if there is a significant relationship between the dependent and each
independent variable. The t-statistic can be calculated when estimated coefficient is divided
by its standard error. The formula is shown as follows.

estimated coefficient−the true coefficient

T −test =
standard error of coefficient

Decision of t-test can be made when absolute value of the estimated t-statistic is
bigger than critical-t, there is a significant relationship between demand and the selected
independent variable. Meanwhile, if the absolute value of the estimated t-statistic is smaller
than critical-t, there is no significant relationship between demand and the selected
independent variable. The rule of thumb for critical-t is 1.96.

Based on the regression result, we can make a decision for t-test of each five
independent variable. The first variable is average income per household with the t-test value
is 3.59 which is greater than critical-t value, 1.96. Therefore, there is a significant relationship
between local beef consumption and average income per household. T-test value for second
variable is 0.20 named population is smaller than the critical-t value, 1.96. It means there is
no significant relationship between local beef consumption and population. Other than that, t-
test value for consumption of imported beef known as the third variable is 1.71 is slightly
smaller than the critical-t value, 1.96. This can decide there is no significant relationship
between local beef consumption and the consumption of imported beef. Next for total
advertisement on imported beef, the t-test value is | -0.64 | also smaller than critical-t value,
1.96. It means there is no significant relationship between local beef consumption and the
total advertisement on imported beef. Lastly, t-test value for average price of chicken | -1.55 |
is smaller than the critical-t value, 1.96. Therefore, there is no significant relationship
between local beef consumption and the average price of chicken.
4.0 REFERENCES

Bevans, R. (2020, January 31). An Introduction to t Tests | Definitions, Formula and

Examples. Scribbr. https://www.scribbr.com/statistics/t-test/#:~:text=A%20t%20test

%20is%20a,are%20different%20from%20one%20another.

‌EViews.com. (2022). Eviews.com. https://www.eviews.com/home.html

‌
5.0 APPENDICES

Dependent Variable: LOCAL_BEEF_CONSUMPTION

Method: Least Squares
Date: 06/25/23 Time: 22:36
Sample: 1 30
Included observations: 30

Variable Coefficient Std. Error t-Statistic Prob.

AVERAGE_INCOME_PER_HOUSEHOLD 0.043636 0.012167 3.586475 0.0015

POPULATION 0.021915 0.109906 0.199399 0.8436
CONSUMPTION_OF_IMPORTED_BEEF 1.208826 0.705680 1.712994 0.0996
TOTAL_ADVERTISEMENT_ON_IMPORTED
_BEEF -20.26802 31.78908 -0.637578 0.5298
AVERAGE_PRICE_OF_CHICKEN -386.8745 248.8867 -1.554420 0.1332
C 3554.357 1885.049 1.885551 0.0715

R-squared 0.641748 Mean dependent var 4263.300

Adjusted R-squared 0.567112 S.D. dependent var 1093.383
S.E. of regression 719.3825 Akaike info criterion 16.17152
Sum squared resid 12420268 Schwarz criterion 16.45176
Log likelihood -236.5728 Hannan-Quinn criter. 16.26117
F-statistic 8.598398 Durbin-Watson stat 2.439889
Prob(F-statistic) 0.000089