Question

• quantity– the number of pints your brewery pours monthly
• price– the price you charge per pint
• population– the surrounding population of the town your brewery is in (measured in thousands)
• wine price– the price of wine sold by Adam Smith’s Invisible Hand Winery
• wine quantity– the number of bottles of wine poured at Adam Smith
• regional income– an index of regional income (measured in units, higher index means higher income)
• pretzel price– the price of the pretzels that you sell
• pretzel quantity – the number of pretzels that you sell
• TV price– the price of 60-inch TV’s

As manager, you are focused on answering the following question

1. Estimate (and report) your demand equation using a linear regression (include the coefficients, p-values for the coefficients, and the  and its p-values). Does this equation make economic sense (in other words, did the signs of these match up with your expectations from question 1)?
2. Evaluate how well this regression performed (use both statistics and your economic intuition). Do you trust your regression? (i.e. would you use it to forecast demand if you were the actual owner of this brewery?) Why or why not?
3. Using the mean of each of your explanatory variables (except for price), what is your forecasted demand as a function of price? At a price of $5 per pint, what is your forecasted revenue?

quantity	price	population	Wine price	regional income	Pretzel price	Pretzel quantity	TV price
582.39	5.52	65.000	5.88	100.00	6.47	419.82	435.93
647.71	4.62	65.423	5.05	100.20	4.53	483.11	430.53
630.73	4.55	65.670	6.34	100.33	6.17	460.68	475.03
530.46	5.44	65.627	4.36	100.35	7.94	410.21	428.11
591.69	5.38	65.836	4.45	100.22	6.75	438.68	485.2
571.22	4.55	66.174	5.09	100.12	5.98	456.03	449.28
592.02	4.94	66.344	5.09	100.51	6.51	437.19	450.64
594.98	5.43	66.691	5.33	100.35	5.64	455.07	436.4
647.15	4.10	67.207	4.89	100.70	6.41	436.45	443.41
545.97	5.17	67.164	3.82	101.03	7.22	414.50	441.22
611.25	4.26	66.485	5.06	100.75	6.74	427.98	471.37
627.39	3.86	66.306	5.35	101.04	6.69	418.57	440.04
650.20	3.38	66.715	3.65	101.05	6.10	454.61	451.33
581.59	4.37	66.523	4.55	101.21	8.82	389.18	441.29
600.35	4.65	66.666	4.71	101.31	5.79	458.25	512.9
602.40	4.60	67.138	4.97	101.48	8.35	390.42	423.4
556.38	6.24	67.231	5.61	101.45	7.61	408.74	446.77
569.91	4.83	67.397	4.34	101.32	5.12	476.67	485.7
552.82	5.40	67.620	3.50	101.67	9.68	367.18	509.06
596.04	4.98	67.802	5.19	101.68	7.65	420.94	464.65
579.05	5.13	67.901	5.05	101.98	7.66	421.70	451.93
607.55	4.33	67.766	4.06	102.01	7.29	425.85	444.5
547.34	4.76	68.190	4.72	102.14	8.36	377.16	478.54
550.19	5.67	68.015	4.77	102.23	7.50	421.82	447.58
594.48	4.58	68.024	4.27	102.30	6.10	451.82	439.6
612.38	5.28	67.606	6.10	102.49	7.21	405.93	465.48
601.80	6.16	67.363	6.66	102.71	6.24	431.57	446.81
597.78	4.80	67.315	3.54	102.65	8.11	398.63	420.81
614.90	5.03	67.445	6.20	102.77	6.57	428.84	433.13
656.44	3.97	67.827	5.53	102.83	7.09	434.49	454.8

Answer 1