Question

In: Economics

You work for Mut the Custard, a frozen custard company. You’ve collected data on monthly sales...

You work for Mut the Custard, a frozen custard company. You’ve collected data on monthly sales (S, number of regular-sized frozen custards per month) the price of your regular-sized frozen custard (P, in dollars), and the population size in the different cities in which your company operates (N, number of people; you currently only have one establishment in each city). You estimate the following regression model: S = a + bP + cN. In your regressions, you usually look for a 10%-or-better level of confidence.

a.   What signs do you expect for a, b, and c?

b.   Your regression yields the following results:

Adjusted R Square

0.777

Independent Variables

Coefficients

Standard Error

t Stat

P-value

Intercept

7056

1040

6.738

0.00106

P

-649.06

126.90

-5.115

0.00372

N

0.0028

0.0034

0.812

0.45380

      Interpret what these coefficients mean.

c.   Does price have a statistically significant effect on sales?

d.   Does population have a statistically significant effect on sales?

e.   What portion of the total variation in sales remains unexplained?

f.    Mut the Custard is considering selling in a new city, where the population is 85,000, and setting its regular-sized frozen custard price at $7.99. What level of monthly sales would you expect in this new city (rounded to the nearest unit)?

Solutions

Expert Solution


Related Solutions

You work for SneauxCeauxne, the Cajun-inspired crushed-ice dessert company. You’ve collected data on monthly sales (S,...
You work for SneauxCeauxne, the Cajun-inspired crushed-ice dessert company. You’ve collected data on monthly sales (S, number of snow-cones per month) and the price of your regular-size snow-cone (P, in dollars), as well as the daily average summer temperature in your most popular market (T, in degrees Fahrenheit). You estimate the following regression model: S = a + bP + cT. In your regressions, you usually look for a 10%-or-better level of confidence. a.   What signs do you expect for...
You work for a snow cone company. You've collected data on monthly sales (S, number of...
You work for a snow cone company. You've collected data on monthly sales (S, number of snow-cones per month) and the price of your regular-size snow-cone (P, in dollars), as well as the daily average summer temperature in your most popular market (T, in degrees Fahrenheit). You estimate the following regression model: S = a + bP + cT. In your regressions, you usually look for a 10%-or-better level of confidence. a)  What are the expected signs for a, b, and...
A retail company must file a monthly sales tax report listing the sales for the month and the amount of sales tax collected.
make it in C++ with pointerA retail company must file a monthly sales tax report listing the sales for the month andthe amount of sales tax collected. Write a program that asks for the month, the year,and the total amount collected at the cash register (that is, sales plus sales tax). Assumethe state sales tax is 4 percent and the county sales tax is 2 percent.If the total amount collected is known and the total sales tax is 6 percent,...
A retail company must file a monthly sales tax report listing the sales for the month and the amount of sales tax collected.
Must be done in Visual StudiosA retail company must file a monthly sales tax report listing the sales for the month and the amount of sales tax collected. Write a program that asks for the month, the year, and the total amount collected at the cash register (that is, sales plus sales tax). Assume the state sales tax is 4 percent and the county sales tax is 2 percent.If the total amount collected is known and the total sales tax...
You’ve collected the following information about Erna, Inc.: Sales = $ 320,000 Net income = $...
You’ve collected the following information about Erna, Inc.: Sales = $ 320,000 Net income = $ 18,500 Dividends = $ 7,300 Total debt = $ 68,000 Total equity = $ 99,000 What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Sustainable growth rate % Assuming it grows at this rate, how much new borrowing will take place in the coming year,...
You’ve collected the following information about Erna, Inc.: Sales = $ 285,000 Net income = $...
You’ve collected the following information about Erna, Inc.: Sales = $ 285,000 Net income = $ 17,800 Dividends = $ 6,600 Total debt = $ 61,000 Total equity = $ 92,000 What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Sustainable growth rate 12.17 % Assuming it grows at this rate, how much new borrowing will take place in the coming...
You’ve collected the following information about Erna, Inc.: Sales = $ 300,000 Net income = $...
You’ve collected the following information about Erna, Inc.: Sales = $ 300,000 Net income = $ 18,100 Dividends = $ 6,900 Total debt = $ 64,000 Total equity = $ 95,000 What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)    Sustainable growth rate             %    Assuming it grows at this rate, how much new borrowing will take place in...
You’ve collected the following information about Erna, Inc.: Sales = $ 290,000 Net income = $...
You’ve collected the following information about Erna, Inc.: Sales = $ 290,000 Net income = $ 17,900 Dividends = $ 6,700 Total debt = $ 62,000 Total equity = $ 93,000 What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)    Sustainable growth rate             %    Assuming it grows at this rate, how much new borrowing will take place in the...
You’ve collected the following information about Erna, Inc.: Sales = $ 335,000 Net income = $...
You’ve collected the following information about Erna, Inc.: Sales = $ 335,000 Net income = $ 18,800 Dividends = $ 7,600 Total debt = $ 71,000 Total equity = $ 102,000 What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Sustainable growth rate? % Assuming it grows at this rate, how much new borrowing will take place in the coming year,...
You’ve collected the following information about Erna, Inc.: Sales = $ 250,000 Net income = $...
You’ve collected the following information about Erna, Inc.: Sales = $ 250,000 Net income = $ 17,100 Dividends = $ 5,900 Total debt = $ 54,000 Total equity = $ 85,000 What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)    Sustainable growth rate             %    Assuming it grows at this rate, how much new borrowing will take place in...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT