As a manager you have been provided the following regression summery output for

Q: As a manager you have been provided the following regression summery output for

Answer to question # 1) Significance of entire regression model: The signficance of the entire regression model can be analysed from the F value and its corresponding P value We got F = 28.01892 with a P value of 0.000002177 Since the P value is very small , this implies the regression model is highly significant.

ID: 3172581 • Letter: A

Question

As a manager you have been provided the following regression summery output for a regression model of a new product.

Regression Statistics

Observations

Significance F

Regression

156.4823

52.16077

28.01892

0.000002177

Residual

48.4023

1.861627

Total

204.8846

Coefficients

Standard Error

P-value

Intercept

23.8163

6.324738

9.24E-07

Price

-0.3035

0.171174

0.001925

Advertising

0.342937

0.165588

0.112442

Price other

-0.23406

0.13935

0.043889

What can you say about the significance of the entire regression model and the significance of each of the specific coefficients? 2 points

Using the regression summery, compute R2 and Adjusted R2. 2 points

Given that currently, PS = $300 and Y = 64, state the demand function for “Model It’s” (format should be: QM = a + bPM) and its inverse demand curve (PM = a + bQM). 2 points

As is true for many information goods, the marginal cost of producing Model It is negligible (MC = 0). However, the company incurred significant costs in developing the product for market, estimated to be $200,000. Given the estimated demand, determine the optimal price and quantity for “Model It”, and compute profit. 2 points