Question

The following questions refer to this regression equation, (standard errors in parentheses.)

​Q = 8,400 - 10 P + 5 A + 4 Px + 0.05 I,

(1,732) (2.29) (1.36) (1.75) (0.15)

R2 = 0.65

N = 120

F = 35.25

Standard error of estimate = 34.3

Q = Quantity demanded

P = Price = 1,000

A = Advertising expenditures, in thousands = 40

PX = price of competitor's good = 800

I = average monthly income = 4,000

e. When would you use a one-tailed rather than a two-tailed t-test when checking significance levels?

f. Should this firm be concerned if macroeconomic forecasters predict a recession? Explain.

Answer 1