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Take Home Assignment 4 (***Round all the answers and intermediate calculations to two decimal places**) Question 1 (100 Marks) The following table is the regression results from the econometric mixtel: LOG(SALES) = 8. + S_LOG (PRICE) + ADVERT +e For a sample of 66 observations SALES: Monthly Sales of product A (S1000) PRICE: A price Index of product (51) ADVERT: Adverting Expenditure on product A (S1000) Dependent Variable: LOGSALES Method: Least Squares Date:03/1920 Time: 20:04 Included observations: 66 Variable Coefficient id Error Storst Prob. LOGPRICE 5.325153 0.000671 0.01GOZ3 0.14180 0.001114 0.009220 37 59270 -7 157444 1.624530 00003 00003 0.0720 R-squared 4.361339 0.022685 SE of regression Bum uses resid Log Ikelhood 0.486097 Mean deperdent var R S D dependenter 0.081425 Aksinfo criterior 0.237708 Schwarz geterian $2.02021 Harran-Oun crter 27.38922 Durbin Watson sta 0.000000 -249003 2.668284 2.234532 ProbiF-statistic a) State the estimated linear equation: LOG(SALES) = 1 + LOG(PRICE) + ADVERT + C (20 marks) b) Interpret the estimates for B, and B. (20 marks) c) Using the p-value approach, are and is statistically different from zero at a 5% significance level? State the null and alternative hypotheses, the decision rule and the results. (20 marks) d) Calculnte the 99% confidence interval for B. (20 marks) e) Compute the value of the adjusted R-square (R). (20 marks) ÉT 1/1

Please help me with the question above.

Answer 1

a) log (sales) = b1 + b2 log (Price) + b3 Advert + e

log (Sales) = 5.32 - 0.58 log (price) + 0.01 Advert + e

b) the $\beta _{2}$ = -0.58 states that a unit change in price will change the sales by 0.58 percentage negatively or reduce the sales by 58 percentages. in the same way $\beta _{3}$ = 0.01 states that a unit change in the advertisement expenditure will increase the sales by 1 percentage.