Assignment no: 01

Prepared for:
Dr. K.M. Zahidul Islam
Course Instructor, Managerial Economics
BUS504 (Spring 2013)

Prepared by:
Saniul Islam
ID: 201103107
Weekend MBA program

IBA, Jahangirnagar University

Date: March 09, 2013
4.4:
Quarterly DataQuarter Quantity

Price

1
2
3
4
5
6
7
8
9
10

83
93
100
108
97
80
105
86
110
90

60
53
43
40
47
57
41
53
37
51

Here quantity is dependent variable and price is independent variable. After performing
regression analysis using MS Excel I got below output:

SUMMARY
OUTPUT
Regression Statistics
Multiple R
0.96953179
R Square
0.939991892
Adjusted R Square 0.932490879
Standard Error
2.740987976
Observations
10
ANOVA
df
Regression
Residual
Total

Intercept
Price

1
8
9

SS
MS
F
941.4958793 941.4958793 125.3153186
60.10412068 7.513015085
1001.6

Coefficients Standard Error

t Stat
158.6331862
5.732404159 27.67306383
1.316041207
0.117562119 11.19443248

P-value
3.13697E-09
3.63411E-06

Significance
F
3.63411E-06

Lower 95%
Upper 95%
145.4142385 171.8521339
-1.58713994 1.044942474

Figure 1: Reference Screenshot.

a) =158.6332-1.316041X
b) If prices increases to $66, estimated sales volume
= 158.6332-1.316041*66
= 71.7745
4.6
a) Yes .The sign of the individual coefficient are consistent with the prediction from
economic theory.
Explanation:
1. The demand of hamburgers should be increased with the increase of sales promotion. So
the sign of coefficient is positive.
2. The demand of hamburger should be increased with the decrease of price of Mac Wend
burger. So, the sign of coefficient of Price is negative.
3. The demand of hamburger should be increased with the increase of direct substitutes.
So, the sign of coefficient of competitors hamburger price (Pc) is positive (+).
4. The demand for hamburger should be increased with the increase of income of
customer. So, the sign of coefficient of income (I) is positive.
b) Q=205.2+23(5000) +200(1) +100(1.20) +.5(20000)
=125525.2
So, quantity demand of burger will be 125525.2

c) Point elasticity of advertising expense at A=$5000

E (5000) =

=
= - 0.916
At, A=5000, Advertising elasticity is - 0.916 (inelastic).That means, decrease in advertising
expenditure will cause quantity demanded to fall and total revenue to fall.
4.14.
Person

Income

Age

Education

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

5
9.7
28.4
8.8
21
26.6
25.4
23.1
22.5
19.5
21.7
24.8
30.1
24.8
28.5
26
38.9
22.1
33.1
48.3

29
36
41
30
34
36
61
29
54
30
28
29
35
59
65
30
40
23
58
60

2
4
8
8
8
10
12
12
12
12
12
13
14
14
15
15
16
16
17
21

Source

SS df MS
F( 1, 18)
Model
455.386625 1 455.386625
Residual 1365.03885 18 75.8354917
Adj R-squared
Total
1820.42548 19 95.8118671
income Coef. Std. Err. t
age
.358941 .1464769 2.45
_cons
9.931731 6.222856 1.60

Number of obs =
= 6.00
Prob> F
R-squared
= 0.2085
Root MSE
P>t [95% Conf.
0.025 .0512044
0.128 -3.142005

Job
experience
9
18
21
12
14
16
16
9
18
5
7
9
12
17
19
6
17
1
10
17
20
= 0.0247
= 0.2502
= 8.7084
Interval]
.6666776
23.00547

I=9.931731+.358941a
Explanation: Here only one variable age is consider which is positively related with income
indicating that income increases with the increases of ages.
b)
Source

SS
F( 3, 16)
Model
1591.36616
Residual
229.059319
Adj R-squared
Total
1820.42548
income
Coef.
age
-.211499
education
2.245189
jobexperie~e 1.024037
_cons
-7.05961

df MS
= 37.05
3 530.455385
16 14.3162074
= 0.8506
19 95.8118671
Std. Err. t
.1097761 -1.93
.2533867 8.86
.2517521 4.07
3.367782 -2.10

Number of obs =

20

Prob > F
R-squared

= 0.0000
= 0.8742

Root MSE
P>t [95% Conf.
0.072 -.4442139
0.000 1.708034
0.001 .490346
0.052 -14.19899

= 3.7837
Interval]
.0212159
2.782345
1.557727
.0797698

I=7.05961-.211499A+2.245189E+1.024037JE
Explanation:
I=7.05961-.211499A+2.245189E+1.024037JE
In part a consider only age variable , so its positively related with Income indicating that
income increases with the increases of ages. But in part b considerring multivariable thoes
are ages, education, job experience. Here ages is negatively related with income because
other two variable education & job experience is considered. Income is increases with the
increases year of education & job experience.

c) Here
Education =14 years
Job experience =10 year
Age = 45 year
Income =-7.05961-.211499A+2.245189E+1.024037JE
=-7.05961-.211499*45+2.245189*14+1.024037*10
=$25.09595