Regression Analysis for Demand Estimation - 1065 Words

Demand Estimation by Regression Method – Some Statistical Concepts for application ( All the formulae marked in red for remembering. The rest is for your concept) In case of demand estimation working with data on sales and prices for a period of say 10 years may lead to the problem of identification. In such a case the different variables that may have changed over time other than price, may have an impact on demand more rather than price. In order to void this problem of identification what we adopt is the techniques of demand estimation through regression process in order to distinguish the effects of different variables on demand. In order to understand the basic working and application of the model, let us start with two variable†¦show more content†¦However there are other parameters the output box provides us. Test of Significance of b value that implies how significant is the impact of the variation in the explanatory variable on variation caused for dependent variable. For this we test the null hypothesis b =0. for that we use a test statistic that follows the t- distribution with degrees of freedom n-k, where nis the number of observations and k is the number of parameters estimated In this case n=10 and k=2. therefore d.f=8. the test statistic t is defined as, as b=0 under null hypothesis and S.E. is the standard error of the estimated b. The S.E of estimated b is given by (to be remembered). This means that as standard error of estimated b is high the variation due to unexplained variation is relatively hgher as compared with the variation explained by explanatory variable. Thus significance of b will be less as t value will be small. T value is compared with the tabulated value of t with degrees of freedom 8 and level of significance to be equal to 5% (level of significance is the region where we may commit Type I error – Rejecting Null HypothesisShow MoreRelatedRegression Analysis for Demand Estimation1052 Words   |  5 PagesDemand Estimation by Regression Method à ¢Ã¢â€š ¬Ã¢â‚¬Å" Some Statistical Concepts for application ( All the formulae marked in red for remembering. The rest is for your concept) In case of demand estimation working with data on sales and prices for a period of say 10 years may lead to the problem of identification. In such a case the different variables that may have changed over time other than price, may have an impact on demand more rather than price. In order to void this problem of identification whatRead MoreManagerial Economics Case Study1010 Words   |  5 PagesECO 556 BM221 4c â€Å"DEMAND FOR VE MICROWAVE OVEN† TABLE OF CONTACT 1.0 INTRODUCTION 2.0 METHODOLOGY 3.0 DATA DEMAND FOR VE MICROWAVE OVEN 4.0 EQUATION 5.0 FINDINGS AND INTERPRETATION 5.1 Evaluation of Statically Significant At 95% Or Significant Level for Each Independent Variable. 5.2 Interpretation Coefficient of Determination 5.3 Interpretation of F-Test 5.4 Interpretation of Standard Error of Estimate 5.5 Derivation of Demand Curve 5.6 Elasticity of Demand 6.0 CONCLUSION APPENDIX Read MoreUniversity Book Store Computer Purchase Program930 Words   |  4 PagesProgram 1. Background. The Busy Biker is a bike shop located close to Tokyo University and owned by Nomura Hideki. He began the shop 20 years ago and sell new and second hand bicycle after fixing it too. The Business grew and demand continued to increase. 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Equivalently, the inverse demand curve shows the willingness to pay for the last item at a given quantity. I agree with your regression coefficients of Q = 883223.748 - 25355.71584P and Cost = 3122901 +8.755693 Q. Linear regression is better at interpolating than extrapolating. The prices ranged from 10.99 to 31.99, so we are interpolating between prices of 10.99 and 31.99. The linear regression is less reliableRead MoreEco550 Assignment 11150 Words   |  5 PagesAssignment 1: Making Decisions Based on Demand and Forecasting Managerial Economics and Globalization, ECO550 Making Decisions Based on Demand and Forecasting A market demand analysis is used to help understand how much consumer demand there is for a given product or service. This type of analysis will help determine if a business can successfully enter a market and generate enough revenue and profit to maintain the business. One must identify the market and the growthRead MoreMaking Decisions Based on Demand and Forecasting1146 Words   |  5 PagesAssignment 1: Making Decisions Based on Demand and Forecasting Managerial Economics and Globalization, ECO550 Making Decisions Based on Demand and Forecasting A market demand analysis is used to help understand how much consumer demand there is for a given product or service. This type of analysis will help determine if a business can successfully enter a market and generate enough revenue and profit to maintain the business. One must identify the market and the growth