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You are the manager of a large automobile dealership who wants to learn more about the effectiveness of various discounts offered to customers over the past 14 months. Following are the average negotiated prices for each month and quantities sold of a basic model (adjusted for various options) over this period of time.

a. Graph this information on a scatter plot. Estimate teh demand equation. what do the regression results indicate about the desirability of discounting the price? Explain

Month Price Quantity
January 12500 15
February 12200 17
March 11900 16
April 12000 18
May 11800 20
June 12500 18
July 11700 22
August 12100 15
September 11400 22
October 11400 25
November 11200 24
December 11000 30
January 10800 25
February 10000 28

b. what other factors besides price might be included in this equation? Do you foresee any difficulty in obtaining these additional data or incorporating them in the regression analysis?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9499459

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