Managerial Economics Assignment: Answers

Running head: MANAGERIAL ECONOMICS
Managerial Economics
Name of the Student
Name of the University
Course ID

MANAGERIAL ECONOMICS1
Table of Contents
Part A...............................................................................................................................................2
Question 1....................................................................................................................................2
Question 2....................................................................................................................................6
Part B...............................................................................................................................................8
Question 1....................................................................................................................................8
Question 2....................................................................................................................................9
Question 3..................................................................................................................................10
Question 4..................................................................................................................................10
References......................................................................................................................................12

MANAGERIAL ECONOMICS2
Part A
The linear demand function to be estimated for Ozark Water Bottle is given as
Q=a+bP+ cM + dPR+eN
Result of the regression for estimating the above linear demand function is
Table 1: Linear regression result
Question 1
Significance of regression as a whole
Hypothesis
Null Hypothesis (H0): All the regression coefficient is equal to Zero

MANAGERIAL ECONOMICS3
Alternative Hypothesis (H1): At least one of the coefficient is significantly different from zero
Test statistics
In order to test overall significance F test statistics is used. The computed value of F test
as obtained from the regression is
F=16.491
Decision
The critical F value at 5% level of significance and (4, 10) degrees of freedom is 3.4780.
The computed F value exceeds critical F meaning rejection of null hypothesis of no overall
significance of the model (Gunst, 2018). The overall model therefore is statistically significant at
5% significance level.
Significance of individual parameters
Hypothesis
Null Hypothesis (H0): The regression coefficient is zero.
Alternative Hypothesis (H1): The regression coefficient is significantly different from zero
Test statistics
‘t’ test statistics is used for testing significance of individual parameters. Computed‘t’
value for the respective coefficients are as follows
Price
tP = Coefficient
Standard error