Exam 7: Demand Estimation and Forecasting

You decide to estimate the following quarterly sales forecasting model for new boat sales in your local county: The equation is estimated using quarterly data on new boat sales in the county from 2001III -2007IV ( t = 1,..., 26). The variable D is a dummy variable for the second quarter, which is the "season" for selling new boats: D = 1 in the second quarter, and 0 otherwise. The results of the estimation are: -The statistical estimates indicate a(n) ___________ (upward, downward) trend in sales of _________ units per year.

refer to the following: A forecaster used the regression equation and quarterly sales data for 1993I-2010IV (t = 1, ..., 64) for an appliance manufacturer to obtain the results shown below. Q is quarterly sales, and D₁, D₂and D₃are dummy variables for quarters I, II, and III. -At the 5 percent level of significance, is there a statistically significant trend in sales?

Border Snacks Inc. produces and sells picante sauce, nacho chips, and queso dip. The company's marketing department estimated a linear demand function for Border's picante sauce: where is the number of jars of picante sauce sold per month, is the price of picante sauce, is the price of a bag of nacho chips, is the price of a jar of queso dip, and M is consumer income. In the market served by Border Snacks, income is currently $16,000. The following regression results were obtained using 22 monthly observations: ‪ -Explain carefully and completely the meaning of the p-value for the parameter estimate on the price of nacho chips.

Border Snacks Inc. produces and sells picante sauce, nacho chips, and queso dip. The company's marketing department estimated a linear demand function for Border's picante sauce: where is the number of jars of picante sauce sold per month, is the price of picante sauce, is the price of a bag of nacho chips, is the price of a jar of queso dip, and M is consumer income. In the market served by Border Snacks, income is currently $16,000. The following regression results were obtained using 22 monthly observations: ‪ -If the price of nacho chips falls by 2.4%, Border Snacks can expect sales of its picante sauce to ___________________ (increase, decrease) by _______%. (HINT: Begin by computing the appropriate estimated cross-price elasticity.) Show your work below:

refer to the following: The manufacturer of Beanie Baby dolls used quarterly price data for 2002I - 2010IV (t = 1, ..., 36) and the regression equation to forecast doll prices in the year 2011. P_t is the quarterly price of dolls, and D1_t , D2_t and D3_t are dummy variables for quarters I, II, and III, respectively. -Using the estimated time-series regression, predicted price in the 1st quarter of 2011 is

For a nonlinear demand function of the form , , the estimated cross-price elasticity of demand is

You decide to estimate the following quarterly sales forecasting model for new boat sales in your local county: The equation is estimated using quarterly data on new boat sales in the county from 2001III -2007IV ( t = 1,..., 26). The variable D is a dummy variable for the second quarter, which is the "season" for selling new boats: D = 1 in the second quarter, and 0 otherwise. The results of the estimation are: -The forecasted sales for the 4^th quarter of 2008 are ___________ units.

refer to the following: A consulting firm estimates the following quarterly sales forecasting model: ‪ The equation is estimated using quarterly data from 2000I-2010III (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, what is the predicted level of sales in 2011I ?

The estimated market demand for good X is where is the estimated number of units of good X demanded, P is the price of the good, M is income, and is the price of related good G. (All parameter estimates are statistically significant at the 1 percent level of significance.) -Good X is a(n) ______________ good and goods X and G are _________________.

refer to the following: 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: where Q = yards of cement demanded monthly, P = the price of Build-Right's cement per yard, M = state tax revenues per capita, and = 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: ‪ -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 estimated demand for a good is , where = units of the good, P = price of the good, M = income, and = price of related good Z. All parameter estimates are statistically significant. Which of the following statements are correct?

Border Snacks Inc. produces and sells picante sauce, nacho chips, and queso dip. The company's marketing department estimated a linear demand function for Border's picante sauce: where is the number of jars of picante sauce sold per month, is the price of picante sauce, is the price of a bag of nacho chips, is the price of a jar of queso dip, and M is consumer income. In the market served by Border Snacks, income is currently $16,000. The following regression results were obtained using 22 monthly observations: ‪ -At the prices set in part c above, the price elasticity of demand for picante sauce is calculated to be ____________________, and demand is ______________ at this point. Show your work below:

refer to the following: 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: where Q = yards of cement demanded monthly, P = the price of Build-Right's cement per yard, M = state tax revenues per capita, and = 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: ‪ -If the price of asphalt ( ) decreases 20%, the estimated quantity of cement demanded will:

A forecaster used the following regression equation and quarterly sales data during 1999II - 2007IV (t = 1, ..., 35) for an appliance manufacturer to obtain the estimation results shown below. Q is quarterly sales, and ,and are seasonal dummy variables for quarters I, II, and III. -The forecasted sales for the 1^st quarter of 2008 are ___________ units. The forecasted sales for the 2^nd quarter of 2008 are ___________ units. The forecasted sales for the 3^rd quarter of 2008 are ___________ units. The forecasted sales for the 4^th quarter of 2008 are ___________ units.

For a linear demand function, , the income elasticity is

The following log-linear demand curve for a price-setting firm is estimated using the ordinary least-squares method: The estimation results are presented below: ‪ -All else constant, a 22 percent increase in price causes quantity demanded _____________ (increase, decrease) by _____ percent.

You decide to estimate the following quarterly sales forecasting model for new boat sales in your local county: The equation is estimated using quarterly data on new boat sales in the county from 2001III -2007IV ( t = 1,..., 26). The variable D is a dummy variable for the second quarter, which is the "season" for selling new boats: D = 1 in the second quarter, and 0 otherwise. The results of the estimation are: -The statistical estimates indicate a(n) ___________ (positive, negative) seasonal effect on 2^nd quarter sales of _________ units in the 2^nd quarter of each year.

The empirical demand function is estimated in log-linear form as where is the estimated number of units of good X demanded, P is the price of X, M is income, and is the price of related good Y. (All parameters estimates are significantly different from zero at the 5 percent level.) -At P = $3.55, M = $25,035, and P_V = $5.07, the predicted quantity demanded is _________ units of good X.

refer to the following: A forecaster used the regression equation and quarterly sales data for 1993I-2010IV (t = 1, ..., 64) for an appliance manufacturer to obtain the results shown below. Q is quarterly sales, and D₁, D₂and D₃are dummy variables for quarters I, II, and III. -Using the estimation results given above, the predicted level of sales in 2011II is _______ units.

The following log-linear demand curve for a price-setting firm is estimated using the ordinary least-squares method: The estimation results are presented below: ‪ -An 8 percent decrease in the price of R, holding all other variables constant, causes quantity demanded to _____________ (increase, decrease) by _____ percent.