Coefficientsa

Standardize
Unstandardized d Collinearity
Coefficients Coefficients Statistics
Toleranc
Model B Std. Error Beta t Sig. e VIF
1 (Constant) 13354.602 6485.419 2.059 .062
price_roses -3628.186 635.628 -.955 -5.708 .000 .661 1.513
price_carnation 2633.755 1012.637 .419 2.601 .023 .713 1.402
disposable_inco
-19.254 30.695 -.093 -.627 .542 .842 1.188
me
a. Dependent Variable:
roses_demand

Now from this table we can put the value of coefficient of independent variable with respect to dependent
variable which is as follows
Y= 13354.602 -3628.186X2 +2633.755X3 -19.254X4 +Ui
Here negative sign of variable X2 shows if prices of roses would be increased then demand of roses would be
decreased that means there is inverse relation.
Positive sign of coefficient of carnation with respect to demand of roses shows if price of carnation will
increase then demand of roses would be increased it is substitute effect as roses are substitute for carnation.
Negative coefficient of disposable income with respect to demand of roses which shows if disposable income
will increase then demand of roses will decrease, which shows it is inferior good.
Significant variable
Only two of them is significant since p -value is less than .05, which are price of roses and price of carnation.
Other are insignificant that means demand of roses is not as much as explained by disposable income .
Now from collinearity statistics
Here Tolerance and VIF (Variance inflated factor) both quantifies the severity of multicollinearity. We can
analyze it by the size of VIF if it is greater than 2 then there is multicollinearity.
Tolerance is inverse of VIF. It is proportion of variance which is not explained by other factor. That means low
tolerance is bad so it should be high so a tolerance of less than .20 shows multicollinearity problem. Here
tolerance for all independent variable is high, and VIF is lower than 2 which shows there is no multicollinearity
problem.

Collinearity Diagnosticsa

Variance Proportions
Dimensi
Model on Eigenvalue Condition Index (Constant) price_roses price_carnation

1 1 1.986 1.000 .01 .01

2 .014 12.016 .99 .99

2 1 2.981 1.000 .00 .00 .00

2 .015 13.998 .14 .91 .04

3 .004 27.644 .86 .09 .96

a. Dependent Variable: roses_demand

Collinearity is linear relationship between two explanatory variables, if correlation between two independent
variable is very high which shows data is suffering from multicollinearity problem.
Condition Index:-
To check whether there is case of multi co linearity we have that if the value of condition index is greater than
15 than there is a problem of multi co linearity. The correspondence values of three factors (price of rose
bundle, carnation price, income) are 15.175, 21.515, and 63.305 respectively.
Here all the values are greater than 15 so there is the problem of multi co linearity.
Eigen Value:-
Eigen value shows the collinearity between independent variables by linear combination. it is important factor
to test multi collinearly. it explains the variance explained by particular factor the values of three factors
(price of rose bundle, carnation price, income) are 0.017,0.006 and 0.001 these values are less than 1 hence
there is a problem of multi co linearity.