Interpreting the result of regression and estimating the demand function and elasticity of demand.
1. From the regression output, estimate the demand function when income is $40,000 and price is $2 per gallon.
Qd = a - b (price) + c (income), where a is the intercept, b is X variable 1, and c is X variable 2 from the regression output.
2. Elucidate the result in terms of R-square, T-test, F-statistic, and signs of each X variables.
The result , we obtained for the above mentioned terms would be as follows,
Generally, R -square is best measures of the goodness of the data fit i.e. how well the regression results fit the date.
3. Elucidate the Price Elasticity Coefficient by using Price (from $2 to $3) and income at $40,000.
4. To increase the sales of organic milk, do you think a price discount is appropriate? Why? If not, why not?