Based on 11 annual observations, the following regressions were obtained:
Model A: Y(sub t) = 2.6911 - 0.4795X(sub t)
se = (.1216) (.1140) r^2 = .6628
Model B: Y(sub t) = 0.7774 - .2530 ln X(sub t)
se = (.0152) (0.0494) r^2 = 0.7448
where Y = the cups of coffee consumed per person per day and X = the price of coffee, dollars per pound.
a. interpret the slope coefficients in the two models. explain specifically.
b. you are told that Y(mean) = 2.43 and X(mean) = 1.11. At these mean values, estimate the price elasticity for model A and show work.
c. what is the price elasticity for model B? show work
d. from the estimated elasticities, can you say that the demand for coffee is price inelastic? why?
e. how would you interpret the intercept in model B? (hint take the anitlog) show work
f. "since the r^2 of model B is larger that that of model A, model B is preferable to model A." COMMENT.© BrainMass Inc. brainmass.com October 16, 2018, 4:17 pm ad1c9bdddf
Benefit of Developing and Examining Models
a.) What benefit does a variable provide when developing and examining models?
b.) Explain the purpose of simple linear regression and scatter diagrams. Please provide a simple linear regression model and define each variable used.
c.) Describe multiple regression analysis and discuss potential uses for this model.View Full Posting Details