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Managerial Economics: Estimate the demand equation, Graph

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The factors that affect the demand for new passenger cars in the U.S. are given; From these data answer the following questions.

1. Estimate the demand equation for new cars of the form Y = a +b1X1 + b2X2 + b3X3+b4X4

2. With the use of a graph, compare the estimated demand Y' based on the above equation with the actual data. Graph both the actual and the estimated demand.

3. Assess the goodness of fit of between the actual and the estimated demand

4. State the specific effects of each independent variable on the demand for automobile

5. Identify the significant variables using the t test. Use the 5% level of sginificance.

The Annual Demand for Passenger Cars in the United States: ( Please see the attachment).


1 = consumer price index in percent

X2 = disposable personal income in bil dols.

X3 = interest rate in percent

X4 = employment in 100

Y = no of new cars sold in 1000

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Solution Summary

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