Statistics and Soft Drink Essay Example

Statistics and Soft Drink Essay CASE 1 DEMAND ESTIMATION and ELASTICITY: Soft Drinks in the U. S. Demand can be estimated with experimental data, time-series data, or cross-section data. In this case, cross-section data appear in the Excel file. Soft drink consumption in cans per capita per year is related to six-pack price, income per capita, and mean temperature across the 48 contiguous states in the United States. QUESTIONS 1. Given the data, please construct (a) a multiple linear regression equation and (b) a log-linear (exponential) regression equation for demand by MS Excel. (20%) 2. Given the MS Excel output in question 1, please compare the two regression equations’ coefficient of determination (R-square), F-test and t-test. Which equation is a good (better) fit? Which equation shows the stronger overall significance to predict the future demand? Which equation will you choose for a better demand estimation? Explain your answer in the language of statistics. 20%) 3. Given your choice of equation in question 2, please interpret each coefficient of independent variable in the soft drink demand estimated equation. (10%) 4. Given your choice of equation in question 2, how many cans/capita/year on soft drink should be for a state in which 6-pack price=$2. 45, Income/Capita=$36,500, and Mean Temp= 68Â °F? (20%) 5. Given your choice of equation in question 2 and the numbers in question 4, please calc ulate the price elasticity of demand and income elasticity. We will write a custom essay sample on Statistics and Soft Drink specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Statistics and Soft Drink specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Statistics and Soft Drink specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Comment on whether the demand is elastic or inelastic and whether soft drink is necessity, normal good or luxury good. (10%) 6. Now omit the price and temperature from the regression equation then run the regression again. Given the Excel output of only one independent variable, income, should a marketing plan for soft drinks be designed that relocates most canned drink machines into low-income neighborhoods? Please explain your answer in the language of economics. (20%)