You are given the following regression results estimating the demand for widgets based on time series data for the past 40 months. Qt = 2.5

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Tod ThielLv2

29 Jan 2019

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You are given the following regression results estimating thedemand for widgets based on time series data for the past 40months.

Qt = 2.5

Consider the following estimated demand function for chicken for a household in Fullerton, California over a period of 25 months.

Q_t = 56.09 - 0.19P_t + 0.03P_t^p

SE = (29.18) (-0.07) (0.019)

R² = 0.81 and R²_adj = 0.805

Number of observations = 25

Here, Q_t is the quantity demanded for chicken (in pounds), P_t is the price of beef (in $), P_t^p is the price of pork (in $).

Interpret the values of R-square and R-square adjusted.

Calculate t statistics for all the estimated coefficients of this regression model.

Determine whether the estimated coefficients are statistically significant at the 1%, 5%, or 10% level of significance.

copperpug836

(b) Alternatively, suppose you estimate a double-log-demand function for widgets as follows:

Qd =1.2789-0.1647Pw (0.077) +0.5115i (0.415) +0.1483P-0.0089T (0.0026)-0.0961D(0.026);

where the standard errors are in parenthesis, Qd is for the quantity of widgets demanded, Pw is for the price of widgets, i is for disposable income, P is for the price of gadgets, T is for sales tax on widgets, and D is for household debt.

Assuming that there are 30 observations and that the R² is 0.80, critically evaluate the regression model and results from a managerial point of view.