Fluidyne Corporation manufactures and sells water filters. Theeconomic forecasting unit of the company has supplied the followingdemand equation: Points:5
QB= 2000- 5PB + 2.5PC + 0.82Y + 0.6AB
(1200) (1.5) (1.2) (0.5) (0.2)
Where,
QB=quantity sold
PB=price per unit
PC=average unit price of competitor’sproduct
Y=income per household
AB=advertising expenditure
R2= 0.86
S.E.E=5
Standard error of coefficients inparentheses (1200) (1.5) (1.2,) (0.5) , ( 0.2)
Given, PB=$50, PC=$45, AB=$12,500 Y=$2,000
- Does each independent variable have a significant effect on thesales of Fluidyne water filters?
- Interpret the coefficient of variables that aresignificant?
- Interpret the coefficient of determination(R2)
- Determine the monthly quantity demanded sold (QB) for waterfilter?
- Is the quantity demanded for water filter (QB) sensitive to itsown price?
- Is water filter a luxury or necessity?
