# Evaluate the estimated demand model

The multiple linear equation is

QDx = 63.63 – 13.01(Pp) + 1.95(Pb) + 0.24(M)

QD = 63.63 -13.01Pp + 1.95 (4.38) + .24 (67)

Questions #3

Evaluate the estimated demand model.

A. What is the R2 ? Is it above 90%? 80%?

i. Explain what the R2 means; i.e. how much of the variation in the quantity       demanded does the model explain?

B. What is the p-level associated with the model’s F-statistic? Is it less than 5%? 10%? What does the significance indicate about the model?

C. Inspect the p-levels for all the independent variables. Are they less than 5%? 10%? Interpret the p-levels and explain which variables are statistically significant

D. Omit any insignificant variables and re-run the model.

i. Make sure your model has at least the independent variables including, the good’s own price, the price of a related good, and income

E. Re-evaluate steps a) – e) with the (new) model and any subsequent results

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