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Exhibit 16-7

Question 34

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Exhibit 16-7.It is believed that the sales volume of one liter Pepsi bottles depends on the price of the bottle and the price of one liter bottle of Coca Cola.The following data has been collected for a certain sales region. Exhibit 16-7.It is believed that the sales volume of one liter Pepsi bottles depends on the price of the bottle and the price of one liter bottle of Coca Cola.The following data has been collected for a certain sales region. Using Excel's regression,the linear model PepsiSales = β<sub>0</sub> + β<sub>1</sub>PepsiPrice + β<sub>2</sub>ColaPrice + ε and the log-log model ln(PepsiSales)= β<sub>0</sub> + β<sub>1</sub>ln(PepsiPrice)+ β<sub>2</sub>ln(ColaPrice)+ ε have been estimated as follows: Refer to Exhibit 16.7.For the estimated linear model,when the price of Pepsi is held constant what is the predicted change in the Pepsi sales if the price of Cola increases by 10 cents? Using Excel's regression,the linear model PepsiSales = β0 + β1PepsiPrice + β2ColaPrice + ε and the log-log model ln(PepsiSales)= β0 + β1ln(PepsiPrice)+ β2ln(ColaPrice)+ ε have been estimated as follows: Exhibit 16-7.It is believed that the sales volume of one liter Pepsi bottles depends on the price of the bottle and the price of one liter bottle of Coca Cola.The following data has been collected for a certain sales region. Using Excel's regression,the linear model PepsiSales = β<sub>0</sub> + β<sub>1</sub>PepsiPrice + β<sub>2</sub>ColaPrice + ε and the log-log model ln(PepsiSales)= β<sub>0</sub> + β<sub>1</sub>ln(PepsiPrice)+ β<sub>2</sub>ln(ColaPrice)+ ε have been estimated as follows: Refer to Exhibit 16.7.For the estimated linear model,when the price of Pepsi is held constant what is the predicted change in the Pepsi sales if the price of Cola increases by 10 cents? Refer to Exhibit 16.7.For the estimated linear model,when the price of Pepsi is held constant what is the predicted change in the Pepsi sales if the price of Cola increases by 10 cents?

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