Rebel Sole is a rapidly expanding shoe company. The following is the demand estimate for its popular shoes. The estimate was done using 40 observations.
Q = 10 -10 P + 4 A +0.42/+ 0.25Py (3) (1.8) (0.7) (0.1) (0.1)
F = 93, s = 6, R2 = 93%
Q is quantity sold (in thousands), P is shoe price, A is advertising expenditure (in thousands), the numbers in parentheses are standard errors. I is disposable income per capita (thousands of dollars), and Py is the price of related goods.
a. Evaluate the model based on F, R².
b. Test the significance of Py
c. If P=$5, A = $30,000, I = 50,000, and Py = $6, calculate advertising elasticity.
d. Given the information in c. above, calculate the 95% confidence interval for Q.
Answer:
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