Estimate overall explanatory power of regression model use

Reference no: EM13389792

Based on 21 months of past data, Ziggy's Drive-In has determined that the demand for its hamburgers is given by the following equation:

Q = 205.2 - 200P + 100PC + 0.5Y + 23.0A

(110.9) (35.65) (49.5) (0.117) (8.712) (standard errors)

R2 = 0.74 SEE = 18.9

where Q = number of hamburgers sold per month, in thousands

P = price of Ziggy's hamburgers, in dollars

PC = price of hamburgers for Ziggy's major competitor, in dollars

Y = income per capita in the surrounding community, thousands of dollars

A = advertising expenditures during the previous month, thousands of dollars

Currently, Ziggy charges $1.00 for its hamburgers, while its closest competitor charges $1.20. Income per capita is $20,000, while advertising was $5,000 in the preceding month.

a. Evaluate the overall explanatory power of the regression model. Use a 0.05 level of significance. State all your hypotheses and explain your results. Do not use rules of thumb. Note: You will need to calculate the F statistic to answer this question.

b. Which of the independent variables, if any, appear to be statistically significant at the 0.05 level in explaining sales? State all your hypotheses and explain your results. Do not use rules of thumb.

c. What proportion of the total variation in sales is explained by the independent variables in this regression equation? How does your answer change if you adjust your answer based on the number of observations relative to the number of variables in this equation?

d. Derive a 95% confidence interval for current sales at the present values of each variable. Do not use rules of thumb.

Reference no: EM13389792

Questions Cloud

How is organization dealing with any of the given drivers : the new business enviroment how is the organization dealing with any of the following drivers of the new business

It is the responsibility of management to apply accounting : it is the responsibility of management to apply accounting standards when communicating with investors and creditors

Consider the market where supply and demand are given by : consider a market where supply and demand are given by qxs -10 px and qxd 56 - 2px. suppose the government imposes a

Find the quantity demanded if price is 10 income is 9000 : a multiplicative demand function of the form qd apb1yb2pob3 is estimated using cross-sectional data and 224

Estimate overall explanatory power of regression model use : based on 21 months of past data ziggys drive-in has determined that the demand for its hamburgers is given by the

The parent receives annual dividends from subsidiary of : a parent holding company sells shares in its subsidiary such that the parent now owns only 65 of the subsidiary and

Draw aggregate expenditure ae curve and point out : in an economy in which government expenditure is 100 billion exports are 60 billion imports are 15 percent of real gdp

Gaap provides guidelines for inclusion of interest in : gaap provides guidelines for the inclusion of interest in the initial cost of a self-constructed asset.required1. what

Coogly company is attempting to determine its weighted : coogly company is attempting to identify its weighted average cost of capital for the coming year and has hired you to

User Account

All Pages