MGE 302 Assignment #3 Economic Problem Solutions

Name #1 ______________________________ UBIT #1 _____________________________
MGE 302 Assignment #3- Due Thursday, March 9 @ 8:00 AM (Buffalo) or 9:00 PM (Singapore)
Submit your assignment as a single page. You must show your work in order to receive full credit. (I recognize that space is limited – show what work you can.) You may upload an Excel file with your regression results, but please write the answers to Question 1 in the form below.
1
a.
Net Sales[t] = -26.63 + 0.033SQFT[t] + 0.18INVENTORY [t] + 7.91 ADVERTISING [t] + 11.02MARKETSIZE[t] -4.42`COMPETITORS`[t]
b.
Intercept: Not Significant at p < .05
SQFT: result is significant at p < .05
INVENTORY: result is significant
ADVERTISING: result is not significant at p < .05
MARKETSIZE: result is not statistically significant at p < .05
COMPETITORS: result is statistically significant at p < .05
c.
If the firm increases adversting by $ 1,000 the nnet sales increase by $ 7906.25 (7.906*1,000)
d.
Y= 0.03311(50000+0.1814(450,000)+7.906(7,000)+11.02(10,000)-4.42(5)-26.63= $ 247288.82

2.
a.(circle/mark answer A B C D
b.(circle/mark answer) A B C D
c. The intercept, G and U are statistically significant at P<.05
Intercept and G are statically significant at P<.01, but U is not statistically significant

3.
a. upward trend in EPS over time
b.(circle/mark answer) 1 2 3 4 5
c.
2.523

1 The data for this question can be found in HW3_Data.xls on UBLearns.
A regional retail manager wants to model the variation in the net sales of his different store locations using the following equation:
NetSales = a + b(StoreSqFt) + c(Inventory) + d(Advertising) + e(MarketSize) + f(Competitors)
Using the data in the RawData tab of file HW3_Data.xls, estimate a multivariate linear regression of the model described above.
* What is the equation of the sample regression line?
NETSALES[t] = -26.6301 + 0.0331109SQFT[t] + 0.181438INVENTORY[t] + 7.90625ADVERTISING[t] + 11.0196MARKETSIZE[t] -4.42027`COMPETITORS\r`[t] + e[t]
Net Sales[t] = -26.63 + 0.033SQFT[t] + 0.18INVENTORY [t] + 7.91 ADVERTISING [t] + 11.02MARKETSIZE[t] -4.42`COMPETITORS`[t]
* Interpret the p-values for the parameter estimates. Which variables are statistically significant? Explain how you determined your answer.
 

Coefficients

Standard Error

t Stat

P-value

Intercept

-26.63009432

28.03987406

-0.94972

0.353589618

SQFT

0.033110853

0.008468867

3.909714

0.000868825

INVENTORY

0.181438239

0.053225876

3.408835

0.002784042

ADVERTISING

7.90625423

2.872597372

2.752302

0.012283973