MGEB11H3 Lecture 5: 2016-09-30
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Where: QD is the average number of seats in economy class on FH ; PFH is the average price (in dollars) of the seat in economy class of FH ; PR is the average price (in dollars) of the seat in economy class of the nearest competitor ; and, M is the level of income (in thousands of dollars) in the region where it operates FH and its main competitor. According to this:
A. Show the correlations between QD, PFH, PR, and M. highlighted the signs of the correlations that have QD with the rest of variables. According to economic theory have felt these signs?
Convert the data in logs and run the following specification:
Ln(QD)t = a + b â Ln(P F H )t + c â Ln(P R)t + d â Ln(M )t +t
The expected signs b<0 by the law of demand and c >0. a is the intercept, and, t : 1,2,3,...., 16.
B. With Minimal Regular square (MCO), using Excel (Data Analysis Regression), run the regression of the above specification and show the estimates of a, b, c, and d.present a summary of their "outcome"
Information is available quarterly from 2010 until 2013 on the airline FlyingHigh (FH). This data is reported in the following table:
Year | Quarter | QD | Faq's | PR | M |
2010 | Q1 | 64.8 | 250 | 250 | 104 |
Q2 | 33.6 | 265 | 250 | 101.5 | |
Q3 | 37.8 | 265 | 240 | 103 | |
Q4 | 83.3 | 240 | 240 | 105 | |
2011 | Q1 | 111.7 | 230 | 240 | 100 |
Q2 | 137.5 | 225 | 260 | 96.5 | |
Q3 | 109.6 | 225 | 250 | 93.3 | |
Q4 | 96.8 | 220 | 240 | 95 | |
2012 | Q1 | 59.5 | 230 | 240 | 97 |
Q2 | 83.2 | 235 | 250 | 99 | |
Q3 | 90.5 | 245 | 250 | 102.5 | |
Q4 | 105.5 | 240 | 240 | 105 | |
2013 | Q1 | 75.7 | 250 | 220 | 108.5 |
Q2 | 91.6 | 240 | 230 | 108.5 | |
Q3 | 112.7 | 240 | 250 | 108 | |
Q4 | 102.2 | 235 | 240 | 109 |