Question

Enterprise Industries produces Fresh, a brand of liquid laundry detergent. In order to study the relationship between price and demand for the large bottle of Fresh, the company has gathered data concerning demand for Fresh over the last 30 sales periods (each sales period is four weeks). The data can be found Fresh.xlsx. Here is the explanation of each variable: Data is below.

Demand = demand for the large bottle of Fresh (in hundreds of thousands of bottles) in the sales period, and

PriceDif = the difference between the average industry price (in dollars) of competitors’ similar detergents and the price (in dollars) of Fresh as offered by Enterprise Industries in the sales period (average industry price – price of Fresh).

2-1) Plot demand versus PriceDif. Does it seem reasonable to use the simple linear regression model to relate Demand to PriceDif?

2-2) Write a linear regression model to examine the relationship between demand and price. Use PriceDif as the independent variable.

2-4) What is the prediction of the demand when the price of Fresh is 50 cents higher than the average industry price; when the price of Fresh is 50 cents lower than the average industry price; when there is no difference between the price of Fresh and the average industry price?

Demand	Price	IndPrice	AdvExp	Ad Campaign	Price Diff.
Y	X1	X2	X3	X4	X5
7.38	3.85	3.80	5.50	B	-0.05
8.51	3.75	4.00	6.75	B	0.25
9.52	3.70	4.30	7.25	B	0.60
7.50	3.70	3.70	5.50	A	0.00
9.33	3.60	3.85	7.00	C	0.25
8.28	3.60	3.80	6.50	A	0.20
8.75	3.60	3.75	6.75	C	0.15
7.87	3.80	3.85	5.25	C	0.05
7.10	3.80	3.65	5.25	B	-0.15
8.00	3.85	4.00	6.00	C	0.15
7.89	3.90	4.10	6.50	A	0.20
8.15	3.90	4.00	6.25	C	0.10
9.10	3.70	4.10	7.00	C	0.40
8.86	3.75	4.20	6.90	A	0.45
8.90	3.75	4.10	6.80	B	0.35
8.87	3.80	4.10	6.80	B	0.30
9.26	3.70	4.20	7.10	B	0.50
9.00	3.80	4.30	7.00	A	0.50
8.75	3.70	4.10	6.80	B	0.40
7.95	3.80	3.75	6.50	B	-0.05
7.65	3.80	3.75	6.25	C	-0.05
7.27	3.75	3.65	6.00	A	-0.10
8.00	3.70	3.90	6.50	A	0.20
8.50	3.55	3.65	7.00	A	0.10
8.75	3.60	4.10	6.80	A	0.50
9.21	3.65	4.25	6.80	B	0.60
8.27	3.70	3.65	6.50	C	-0.05
7.67	3.75	3.75	5.75	B	0.00
7.93	3.80	3.85	5.80	C	0.05
9.26	3.70	4.25	6.80	C	0.55

Answer 1