1a: Formulate the regression model (i.e. demand function) based on the estimates

Question

1a: Formulate the regression model (i.e. demand function) based on the estimates.

(Part I): Hypothetically, the statistical table below describes Ericsson's consumer cell-phone business in ND Dep. Var. QdR-Square F-RatioP-value on F Obs.: 750 Variable Intercept 165.81 0.0001 T-Ratio 11.33 4.95 2.25 4.89 2.12 1.80 0.8865 Para. Est. Std. Err 2451.69 135.762 0.22301 2.5713 27.8122 1.13518 2.31569 216.321 27.4501 0.09912 8.71024 13.1256 0.631209 0.824766 2.81 P-value 0.0001 0.0008 0.0317 0.0001 0.0454 0.0876 0.0001 PAPL PSSG where, P is the price of Ericsson's cell-phone, I is the average household income, PAPL is the price of Ericsson 's related product, PSSG is the price of Ericsson 's related (another) product, N is the number of ND consumers, and T is the (electronic) taste (preference) of ND consumers. 1b: In ND, does Ericsson's demand function follows the typical law of demand? Explain. Is Ericsson's cell-phone a normal or inferior good? Explain. 1d: Are N and T, respectively, follows the typical consumption pattern (hint: sign of the estimates) for Ericsson's products? Explain.

Explanation / Answer

Y(Demand of ND)= a0+a1(P)+a2(I)+a3(PAPl)+a4(PSSG)+a5(N)+a6(T)+ ei

Ei is error term

Qd(ND)=2451.69-135.62(P)+0.22301(I)+42.5713(PAPL)+27.8122(PSSG)+1.13518(N)+231569(T)+ ei

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