Demand Estimation

DEMANDESTIMATION:SoftDrinks

Demand canbeestimated with experimentaldata, time-seriesdata,orcross-section data.Inthiscase, cross-section data appearin theExcelfile.Softdrinkconsumptionincanspercapitaperyearisrelatedtosix-packprice,incomepercapita,andmeantemperature acrossthe48 contiguousstatesin the UnitedStates.

QUESTIONS

1.      Giventhedata, pleaseconstructamultiplelinearregression program byMSExcel.

2.      Interpreteachcoefficientofindependentvariableinthesoftdrinkdemandestimatedfunctioninquestion1.

3.     Givenyouranswerinquestion1,pleasecommentonwhethertheregressionestimatedfunctionis agoodfitor not.Whatistheinterpretation ofcoefficientofdetermination (R-square)?Mayweusetheestimatedfunctionto predict forthefuturedemand?Explainwhy.

4.      How manycans/capita/yearonsoftdrink should befora stateinwhich6-packprice=$1.95, Income/Capita=$23,500,andMeanTemp= 68°F?

5.      Nowomitthe priceandtemperaturefromthe regressionequation.Shouldamarketingplanforsoftdrinksbe designedthatrelocatesmostcanneddrink machinesintolow-incomeneighborhoods?Whyorwhy not?