QUESTION 1 (a) Lenny's, a national restaurant chain, conducted a study of the factors affecting demand (sales). The foll

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Question 1 A Lenny S A National Restaurant Chain Conducted A Study Of The Factors Affecting Demand Sales The Foll 1 (246.58 KiB) Viewed 22 times

Question 1 A Lenny S A National Restaurant Chain Conducted A Study Of The Factors Affecting Demand Sales The Foll 2 (240.62 KiB) Viewed 22 times

QUESTION 1 (a) Lenny's, a national restaurant chain, conducted a study of the factors affecting demand (sales). The following variables were defined and measured for a random sample of 30 of its restaurants: = Annual restaurant sales (in thousand) X₁ = Disposable personal income (per capita) of residents within 5 mile radius X₂ = License to sell beer/wine (0 = No, 1 = Yes) X3 = Location (within one-half mile of interstate highway--0= No, 1 = Yes) = Population (within 5 mile radius) X4 = X5 = Number of competing restaurants within 2 mile radius The data were entered into a computerized regression program and the following results were obtained: MULTIPLE R 0.889 0.79 R-SQUARE STD. ERROR OF EST. 0.40 ANALYSIS OF VARIANCE DF Sum Squares Mean Sqr. F-Stat Regression 5 326.13 65.226 18.17 Error 24 86.17 3.590 Total 29 412.30 Variable Coefficient Std. Error t-Value Constant 0.363 0.196 1.852 X₁ 0.00275 0.00104 2.644 X₂ 0.818 X3 0.698 X4 0.00331 0.00126 2.627 X5 46.2 12.1 -3.818 Questions: i. Give the regression equation for predicting restaurant sales. (2 marks) ii. Give an interpretation of each of the estimated regression coefficients. (5 marks) iii. Which of the independent variables (if any) are statistically significant at the .05 level in "explaining" restaurant sales? (4 marks) iv. What proportion of the variation in restaurant sales is "explained" by the regression equation? (2 marks) V. Give two other factors that most likely to affect the company's sales. (3 marks) >××××× Y 76.65 164.3 93.70 235.4
(b) The following table shows the quantity and the long-run total cost of a firm. Quantity (thousands) 1 2 3 9 4 5 6 7 8 280 340 432 546 672 Long-run total cost 100 160 222 936 i. At what level(s) of quantity are there economies of scale? Explain your answer. ii. Discuss two factors that create economies of scale. (6 marks) (c). Is it true that in a short-run production process, the marginal cost curve eventually slopes upward because firms have to pay workers a higher wage rate as they produce more output? Explain your answer. (3 marks) (TOTAL: 25 marks)