Essay
Liza is a manager of a leading soft drink manufacturing firm. Liza uses 10 months data and estimates the following demand equation:
Q = 10 - .5P + 1.5Y + .25PR
(2) (.17) (.75) (.50)
where P is the price of the soft drink manufactured by Liza's firm, Y refers to household per capita income, and PR is the price of a rival soft drink manufacturing firm. The standard errors of the coefficients are given in the parentheses. Which of the explanatory variables have significant effects on the demand for soft drink manufactured by Liza's firm? Explain.
(At 95% confidence level, the relevant t-statistic for 6 degrees of freedom is 1.94)
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