Bachanta Mexican (BM) has collected data on price ($ per burrito) and quantity (of burritos) sold over the last ten year
Posted: Sun Jun 05, 2022 12:10 pm
Bachanta Mexican (BM) has collected data on price ($ per
burrito) and quantity (of burritos) sold over the last ten years.
The firm has also collected data on the price ($ per slice of
pizza) charged by Luciano's Pizza (LP) and the percentage change of
growth in consumer income. The data are as follows below in the
table:
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 bottle sales if burrito
price is $3, pizza price is
$4, and income growth is 2(%).
e. According to your results, are burrito and pizza substitutes or
complements? Can
you be 99% confident? Explain.
f. Is burrito a normal or inferior good? Can you be 95% confident?
Explain.
g. You wish to estimate the demand for burrito Q =
αPbmβ1 Plpβ2. (Note
that you are not
including income in your multiplicative demand model.)
Provide the appropriate regression results.
h. Provide the values for α, β1, and β2 that you would insert in Q
= αPbmβ1 Plpβ2.
i. Provide the price elasticity of demand.
j. Suppose you wanted to include the income growth variable in your
model. What
problem would you have to deal with if you wish to use the income
growth data in the
table? (If you are not sure, try including it in your
regression.)
Year
Quantity
Price
Price LP
Income Growth
1
33,500
4.40
4.09
-1
2
92,600
4.79
3.56
3
3
32,400
4.08
4.15
1
4
81,700
3.47
4.18
0
5
144,800
2.06
4.33
2
6
114,300
3.74
3.58
1
7
156,600
3.11
3.75
4
8
158,000
2.29
3.95
0
9
58,100
3.24
4.39
3
10
135,000
2.10
4.45
4
burrito) and quantity (of burritos) sold over the last ten years.
The firm has also collected data on the price ($ per slice of
pizza) charged by Luciano's Pizza (LP) and the percentage change of
growth in consumer income. The data are as follows below in the
table:
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 bottle sales if burrito
price is $3, pizza price is
$4, and income growth is 2(%).
e. According to your results, are burrito and pizza substitutes or
complements? Can
you be 99% confident? Explain.
f. Is burrito a normal or inferior good? Can you be 95% confident?
Explain.
g. You wish to estimate the demand for burrito Q =
αPbmβ1 Plpβ2. (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
= αPbmβ1 Plpβ2.
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.)
Year
Quantity
Price
Price LP
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