Q. 8. A manufacturer of calculate workstations gared average monthly sales figures from its 56 branch offices and dealerships across nation and estimated following demand for its product:
Q = 15,000 - 2.80P + 150A + 0.3PPC +0.35Pm +0.2Pc
t- statistic (5,23) (1.29) (175) (0.12) (0.17) (0.13)
R2 = 0.68 F = 21.25
variables and their assume values are
Q = Quantity
P = Cost of basic model = 7,000
A = Advertising expenditures (in thousands) = 52
Ppc = Average cost of personal calculate = 4,000
Pm = Average cost of mini calculate = 15,000
P¬c = Average cost of a leading competitor's workstation = 8,000
a. Calculate elasticity for each variable. On this basis, examine relative impact that each variable has on demand. Illustrate what implications do these results have for industry's marketing and pricing?
b. Conduct a t-test for statistical significance of each variable. Examine results of t-tests in light of policy implications mentioned.
c. Assume a manager evaluating se results suggests that interest rates and performance of calculate (typically measured in millions of instructions per second, or MIPS) are important determinants of demand for workstations and must be included in study. How would you respond to this suggestion? Elaborate.