Question

Problem 2-20pts The marketing department of Coca Cola wanted to analyze the relationship between the price of Coke and the demand for it. They were concerned that if they continue increasing the price, people will switch to Pepsi. Calculate B0 and B1 for the following data and give interpretation for the results. Price 17.76 25.37 22.83 17.76 25.37 Week Demand in quantity 47 39 43 49 41 4 Problem 3 (20 pts) In problem 2 test the hypothesis that B-0 at 5% level of significance, using the rejection region method, what conclusion you can provide, based on that test.

Answer 1

(x-x) (y-y) 12.9856 -17.0496 0.8096 21.1016 9.9456 -61.892 (AT) 16.4674 12.6167 1.0241 16.4674 12.6167 59.192 (y-y) 10.2400 23.0400 0.6400 27.0400 7.8400 68.800 S.No 1 2 17.76 25.37 22.83 17.76 25.37 109.09 21.8180 47 39 43 49 41 219 43.8000 4 Total SSY Mean SSX sample size: here 43.8000 21.8180 from above 59.1923 61.8920 slope- 1.04561 4.0851 S-SSE/(n-2) error variance ơ2_ 1.362 std error ơ 1.1669 null hypothesis Alternate Hypothesis 0 0 for 0.05 level,two tailed test and n-2 3 degree of freedom, critical t- Decision rule 3.1824 reject Ho if absolute value of test statistic lt>3.182 estimated standard error of slope se(P1)- 0.1517 A/sel A) test stat t = -6.8938

as test statistic falls in rejection region we reject null hypothesis and conclude that there is a significant linear relationship between price and demand,