1. Use regression to estimate the demand function. Show the results.
2. Write the subsequent demand equation, with Qd as the dependent variable; Price, Advertising, Product Development, and Rel Price as the independent variables.
3. How strong is the relationship between the quantity demanded and the set of independent variables? List and briefly interpret at least two measures of this strength.
4. Which variable is most important in determining quantity demanded? Justify the reasoning?
2. Write the subsequent demand equation, with Qd as the dependent variable; Price, Advertising, Product Development, and Rel Price as the independent variables.
3. How strong is the relationship between the quantity demanded and the set of independent variables? List and briefly interpret at least two measures of this strength.
4. Which variable is most important in determining quantity demanded? Justify the reasoning?
| The following sales and marketing data was accumulated by a manufacturer over the past 12 quarters. | ||||||||
| Qd | Price | Adv | Prod Dev | Rel Price | ||||
| 561,628 | $ 9.75 | $ 150,000 | $ 115,000 | $ 9.46 | ||||
| 697,734 | $ 9.25 | $ 162,000 | $ 100,000 | $ 9.44 | ||||
| 761,217 | $ 9.40 | $ 125,000 | $ 125,000 | $ 10.14 | ||||
| 667,994 | $ 10.25 | $ 250,000 | $ 100,000 | $ 10.09 | ||||
| 496,985 | $ 10.40 | $ 200,000 | $ 150,000 | $ 10.21 | ||||
| 637,148 | $ 9.90 | $ 160,000 | $ 120,000 | $ 10.16 | ||||
| 569,773 | $ 10.55 | $ 250,000 | $ 100,000 | $ 10.34 | ||||
| 663,146 | $ 10.17 | $ 245,000 | $ 115,000 | $ 10.31 | ||||
| 432,424 | $ 10.30 | $ 185,000 | $ 140,000 | $ 10.52 | ||||
| 535,571 | $ 10.50 | $ 140,000 | $ 150,000 | $ 10.56 | ||||
| 698,376 | $ 10.20 | $ 185,000 | $ 140,000 | $ 10.38 | ||||
| 793,260 | $ 10.00 | $ 120,000 | $ 150,000 | $ 10.32 | ||||
| Variable Definitions: | ||||||||
| Qd = quantity demanded, in units | ||||||||
| Price = price per unit charged by the firm that quarter | ||||||||
| Adv = dollars spend in advertising, that quarter | ||||||||
| Prod Dev = dollars spent in product development that quarter. Product development should be thought of as | ||||||||
| money spent on developing additional features or properties that make the product more desirable | ||||||||
| in the eyes of customers. | ||||||||
| Rel Price = Price of a related product |
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