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A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product:
Q = +15,000 – 2.80P + 150A + 0.3Ppc + 0.35Pm + 0.2Pc
= 15,000- 2.80 (7000) + 150 (52) + .3 (4000) + .35 (15000) + .2 (8000)
(5,234) (1.29) (175) (0.12) (0.17) (0.13)
R2 = 0.68 SEE = 786 F = 21.25
The variables and their 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 a minicomputer = 15,000
Pc = Average price of a leading competitor’s workstation = 8,000
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