# Managerial Economics (T-Statistic; F-Test; Null Hypothesis)

Not what you're looking for?

Famous Electronics sells TV satellite dishes and has been in business for a number of years. The firm's owner has become concerned about the firm's pricing, advertising, and other competitive strategies. She hired a consulting firm to estimate the demand function for TV dishes. The consulting firm informed her that the demand function was estimated using data gathered from 150 similar firms operating during the past year. Standard deviations of each of the regression coefficients are reported in parenthesis.

Qx = 1500 - 0.8 Px + 20 Pc + 0.032 Y + 0.012 Ax

(240) (0.17) (4.5) (0.007) (0.002)

R2 = 0.25

Standard Error of the estimate = 40.0

where: Qx = annual quantity of dishes sold

Px = the price per dish

Pc = the price of regular cable TV service

Y = average income

Ax = advertising expenditures on dishes

Current values for the independent variables are: Px = 1,500; Pc = 60; Y = 45,000; and Ax = 50,000

Use t-statistic or F-test and null hypothesis wherever applicable:

a. Calculate the expected quantity of dishes to be sold, given the current values of the independent variables.

b. Construct and interpret the meaning of a 95% confidence interval around the estimated quantity of dishes to be sold as forecasted in part a.

c. What proportion of total inter-firm variation in quantity sold is explained by the model? Is this value significantly different from zero, assuming a desired 95% confidence level?

d. Calculate and interpret the economic meaning of the point demand elasticity corresponding to each of the model's independent variables Px, Pc, etc.

##### Purchase this Solution

##### Purchase this Solution

##### Free BrainMass Quizzes

##### Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

##### Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

##### Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

##### Lean your Process

This quiz will help you understand the basic concepts of Lean.

##### Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.