Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince

Exercise 1

You are the manager of a firm that sells a leading brand of alkaline battries. A file named Q12.xls with data on the demand for your product is available online at www.mhhe.com/baye7e. Specifically, the file contains data on the natural logarithm of your quality sold, price, and the average income of consumers in various regions around the world. Use this information to perform a log-linear regression, and then determine the likely impact of a 3 percent decline in global income on the overall demand for your product.