Pascual’s Pizza (PP) has collected data on price ($ per slice) and quantity (of slices) sold over the last ten years. Th

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Pascual’s Pizza (PP) has collected data on price ($ per slice)
and quantity (of slices) sold over the last ten years. The firm has
also collected data on the price ($ per single scoop ice cream
cone) charged by Cow Creamery (CC) and the percentage change of
growth in consumer income. The data are as follows:
Year
Quantity
Price
Price CC
Income Growth
1
33,500
4.40
4.09
-1
2
92,600
4.79
3.56
3
3
32,400
4.08
4.15
1
4
81,700
3.47
4.18
0
5
144,800
2.06
4.33
2
6
114,300
3.74
3.58
1
7
156,600
3.11
3.75
4
8
158,000
2.29
3.95
0
9
58,100
3.24
4.39
3
10
135,000
2.10
4.45
4
a. Provide a linear regression.
b. Provide and explain the statistical significance of the
independent variables.
c. Interpret the R2 and the F statistics.
d. Provide a 95% confidence interval for pizza sales if pizza
price is $3, ice cream price is $4, and income growth is 2(%).
e. According to your results, are ice cream and pizza
substitutes or complements? Can you be 99% confident? Explain.
f. Is pizza a normal or inferior good? Can you be 95% confident?
Explain.
g. You wish to estimate the demand for pizza Q =
αPppβ1 Pcc β2. (Note
that you are not including income in your multiplicative demand
model.)
Provide the appropriate regression results.
h. Provide the values for α, β1, and β2 that you would insert in
Q = αPppβ1 Pcc β2.
i. Provide the price elasticity of demand.
j. Suppose you wanted to include the income growth variable in
your model. What problem would you have to deal with if you wish to
use the income growth data in the table? (If you are not sure, try
including it in your regression.)