Exam 7: Demand Estimation and Forecasting

estimated demand for a good is $\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }$ where Q is the quantity demanded of the good,P is the price of the good,M is income,and $P _ { R }$ is the price of related good R.The coefficient on P

Time-series data

The following linear demand specification is estimated for Conlan Enterprises,a price-setting firm: $Q = a + b P + c M + d P _ { R }$ where Q is the quantity demanded of the product Conlan Enterprises sells,P is the price of that product,M is income,and $P _ { R }$ is the price of a related product.The results of the estimation are presented below: Assume that the income is $10,000,the price of the related good is $40,and Conlan chooses to set the price of this product at $30.At the prices and income given above,what is the income elasticity?

The manufacturer of Beanie Baby dolls used quarterly price data for 2012I - 2020IV (t = 1,...,36)and the regression equation $P _ { t } = a + b t + c _ { 1 } D 1 _ { t } + c _ { 2 } D 2 _ { t } + c _ { 3 } D 3 _ { t }$ to forecast doll prices in the year 2021. $P _ { t }$ is the quarterly price of dolls,and $D 1 _ { t } , D 2 _ { t }$ and $D 3 _ { t }$ are dummy variables for quarters I,II,and III,respectively. At the 2 percent level of statistical significance,is there a statistically significant trend in the price of dolls?

estimated demand for a good is $\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }$ where Q is the quantity demanded of the good,P is the price of the good,M is income,and $P _ { R }$ is the price of related good R.This good and the related good R are

estimated demand for a good is $\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }$ where Q is the quantity demanded of the good,P is the price of the good,M is income,and $P _ { R }$ is the price of related good R.The good is

Problems in forecasting include:

The following linear demand specification is estimated for Conlan Enterprises,a price-setting firm: $Q = a + b P + c M + d P _ { R }$ where Q is the quantity demanded of the product Conlan Enterprises sells,P is the price of that product,M is income,and $P _ { R }$ is the price of a related product.The results of the estimation are presented below: Assume that the income is $10,000,the price of the related good is $40,and Conlan chooses to set the price of this product at $30.At the prices and income given above,what is the price elasticity of demand?

Build-Right Concrete Products produces specialty cement used in construction of highways.Build-Right is a price-setting firm and estimates the demand for its cement by the State Highway Department using a demand function in the nonlinear form: $Q = a P ^ { b } M ^ { c } P _ { R } ^ { d }$ where Q = yards of cement demanded monthly,P = the price of Build-Right's cement per yard,M = state tax revenues per capita,and $P _ { R }$ = the price of asphalt per yard.The manager at Build-Right transforms the nonlinear relation into a linear relation for estimation.The estimation results are presented below: Given the above,at the 1 percent level of significance,the number of degrees of freedom for a t-test is _____,and the critical value of the t-statistic is ________.Only parameter estimate(s)________ is (are)NOT statistically significant at the 1 percent level of significance.

The manufacturer of Beanie Baby dolls used quarterly price data for 2012I - 2020IV (t = 1,...,36)and the regression equation $P _ { t } = a + b t + c _ { 1 } D 1 _ { t } + c _ { 2 } D 2 _ { t } + c _ { 3 } D 3 _ { t }$ to forecast doll prices in the year 2021. $P _ {t }$ is the quarterly price of dolls,and $D 1 _ { t } , D 2 _ { t }$ and $D 3 _ { t }$ are dummy variables for quarters I,II,and III,respectively. Using the estimated time-series regression,predicted price in the 1st quarter of 2014 is

A forecaster used the regression equation $Q _ { t } = a + b t + c _ { 1 } D _ { 1 } + c _ { 2 } D _ { 2 } + c _ { 3 } D _ { 3 }$ and quarterly sales data for 2004I-2021IV (t = 1,...,64)for an appliance manufacturer to obtain the results shown below.Q is quarterly sales,and $D _ { 1 } , D _ { 2 }$ and $D _ { 3 }$ are dummy variables for quarters I,II,and III. At the 5 percent level of significance,is there a statistically significant trend in sales?

A consulting firm estimates the following quarterly sales forecasting model: $Q _ { t } = a + b t + c D$ The equation is estimated using quarterly data from 20010I-2020III (t = 1,...,43).The variable D is a dummy variable for the second quarter where: D = 1 in the second quarter,and 0 otherwise. The results of the estimation are: Using the estimated trend line above,what is the predicted level of sales in 2021I ?

Build-Right Concrete Products produces specialty cement used in construction of highways.Build-Right is a price-setting firm and estimates the demand for its cement by the State Highway Department using a demand function in the nonlinear form: $Q = a P ^ { b } M ^ { c } P _ { R } ^ { d }$ where Q = yards of cement demanded monthly,P = the price of Build-Right's cement per yard,M = state tax revenues per capita,and $P _ { R }$ = the price of asphalt per yard.The manager at Build-Right transforms the nonlinear relation into a linear relation for estimation.The estimation results are presented below: Given the above,if the price of asphalt ( $P _ { R }$ )decreases 20%,the estimated quantity of cement demanded will:

The manufacturer of Beanie Baby dolls used quarterly price data for 2012I - 2020IV (t = 1,...,36)and the regression equation $P _ { t } = a + b t + c _ { 1 } D 1 _ { t } + c _ { 2 } D 2 _ { t } + c _ { 3 } D 3 _ { t }$ to forecast doll prices in the year 2021. $P _ { t}$ is the quarterly price of dolls,and $D 1 _ { t } , D 2 _ { t }$ and $D 3 _ { t }$ are dummy variables for quarters I,II,and III,respectively. In any given year price tends to vary from quarter to quarter as follows:

A forecaster used the regression equation $Q _ { t } = a + b t + c _ { 1 } D _ { 1 } + c _ { 2 } D _ { 2 } + c _ { 3 } D _ { 3 }$ and quarterly sales data for 2004I-2021IV (t = 1,...,64)for an appliance manufacturer to obtain the results shown below.Q is quarterly sales,and $D _ { 1 } , D _ { 2 }$ and $D _ { 3 }$ are dummy variables for quarters I,II,and III. Using a 5 percent significance level,these estimation results indicate that sales in

The following linear demand specification is estimated for Conlan Enterprises,a price-setting firm: $Q = a + b P + c M + d P _ { R }$ where Q is the quantity demanded of the product Conlan Enterprises sells,P is the price of that product,M is income,and $P _ { R }$ is the price of a related product.The results of the estimation are presented below: Given the above,at the 1% level of significance,the critical value of the t-statistic used by Conlan to test for statistical significance has _____ degrees of freedom and is equal to ________.

A consulting firm estimates the following quarterly sales forecasting model: $Q _ { t } = a + b t + c D$ The equation is estimated using quarterly data from 20010I-2020III (t = 1,...,43).The variable D is a dummy variable for the second quarter where: D = 1 in the second quarter,and 0 otherwise. The results of the estimation are: Given the above,these estimates indicate that the second quarter change in sales is

A forecaster used the regression equation $Q _ { t } = a + b t + c _ { 1 } D _ { 1 } + c _ { 2 } D _ { 2 } + c _ { 3 } D _ { 3 }$ and quarterly sales data for 2004I-2021IV (t = 1,...,64)for an appliance manufacturer to obtain the results shown below.Q is quarterly sales,and $D _ { 1 } , D _ { 2 }$ and $D _ { 3 }$ are dummy variables for quarters I,II,and III. The estimated QUARTERLY increase in sales is ______ units,and the estimated ANNUAL increase in sales is ______ units.

estimated demand for a good is $\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }$ where Q is the quantity demanded of the good,P is the price of the good,M is income,and $P _ { R }$ is the price of related good R.If income decreases by $1,000,all else constant,quantity demanded will ________ by _________ units.

The manufacturer of Beanie Baby dolls used quarterly price data for 2012I - 2020IV (t = 1,...,36)and the regression equation $P _ { t } = a + b t + c _ { 1 } D 1 _ { t } + c _ { 2 } D 2 _ { t } + c _ { 3 } D 3 _ { t }$ to forecast doll prices in the year 2021. $P _ { t }$ is the quarterly price of dolls,and $D 1 _ { t } , D 2 _ { t }$ and $D 3 _ { t }$ are dummy variables for quarters I,II,and III,respectively. What is the estimated intercept of the trend line in the 4th quarter?