A manufacturer of a computer workstations gathered average monthly salesfigures from its 56 branch offices and dealershi...

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A manufacturer of a computer workstations gathered

April 14, 2018

A manufacturer of a computer workstations gathered average monthly sales
figures from its 56 branch offices and dealerships across the country and estimated
the following demand for its products:
Q = +15000 – 2.80 P + 150 A + 0.3 Ppc + 0.35 Pm +0.2 Pc
(5,234) (1.29) (175) (0.12) (0.17) (0.13)
R2 = 0.68 SEE = 786 F = 21.25
The Variables are assumed values are
Q = Quantity
P = Price of basic model = 7,000
A = Advertising expenditures in thousands = 52
Ppc = Average price of a personal computer = 4,000
Pm = Average price of mini computer = 15,000
Pc = Average price of leading competitor workstations = 8,000

a. Compute the elasticity for each of the variables. On this basis discuss the relative impact that each variable has on the demand. What implications do the results have for the firms marketing and pricing policies?
b. Conduct a t-test for the statistical significance of each variable. In each case state whether a one-tail or two-tail test is required, what difference, if any, does it make to use a one-tail versus a two-tail test on the results. Discuss the results of the t-tests in light of the policy implications mentioned.
c. Suppose a manger evaluating these results suggests that interest rates and the performance of the computer (typically measured in millions of instructions per second, or MIPS) are important determinants of the demand for workstation and must therefore be included in the study. How would you respond to this suggestion? Elaborate










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