Problem Based Learning
Lecturer:Dr. WAN AZMAN SAINI WAN NGAH
Khong Yeen LaiGM 04349
PROBLEM BASED LEARNING: GSM5000 (MANAGERIAL ECONOMICS)
You have been appointed as a member of a consultation team who is working on this very important assignment for a soft drink company. The main task is to evaluate factors affecting the soft drink consumption. Therefore, you should revise the knowledge of demand analysis and carry out an investigation on the possible determinants of the demand for the product. The consultant should also describe the methodology of a multiple linear regression and its purpose in estimating a demand function.
The consultant should then run a multiple linear regression in linear and multiplicative forms based on the data provided by the company and report on the estimated result. They will have to evaluate the estimated demand equations both in linear and multiplicative forms, select the one, which can best describe the consumption. The consultant will also have to obtain the estimated values of the various demand elasticities from the estimated coefficients of the regression and explain the meaning of each elasticity. From the demand equation, the consultant should recommend how to improve the soft drink consumption.
a) Estimate the demand for soft drinks using a multiple linear regression in both linear and multiplicative forms
By using Microsoft excel to generate the coefficient, we get below equation Q = a - b1X1 + b2X2 + b3X3
Q = 514.890 – 242.884X1 + 1.223X2 + 2.919X3
(44.9245) (1.5596) (0.7313) => standard error WhereQ = quantity consumed
a = Intercept / Constant
b1..3 = Coefficients
X1 = Price Per Six-Pack
X2 = Income Per Capita
X3 = Mean Temperature