Answer to Question #74081 in Microeconomics for Zulfiqar
St = 12.5 + 0.14t (3.28)
a. What is the interpretation of the coefficient of t ? Is the coefficient statistically significant at the 95 percent level ? Explain
b. Forecast the demand for cottage cheese in the third quarter of 2006.
Answer: As show in the equation, the value of coefficient of t is 3.28, which is positive. From this, it can be interpreted that the sample of historical sales of cottage cheese collected for the period of 1972 to 2004 is generated with a specific mean.
As per the given regression equation, p-value is 0.14, which is greater than the alpha level of 0.05 (95% level). It means the coefficient is statistically significant at the 95 percent level.
Answer: For third quarter of 2006, the value of t is 139, so expected demand for cottage cheese will be:
S_139 = 12.5 + [(0.14 × 139) × (3.28)]= 76.33
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