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On top of the its own price effect on sales, Mr. Wok is also interested how...

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Advance Math

  1. On top of the its own price effect on sales, Mr. Wok is alsointerested how the sales will change as Competitor’s pricechanges.

Please use data in “Linear regressionswith competitor price.xsls”

  • Estimate the coefficients with Mr. Work’s own price and itscompetitor
  • How do the two prices affect the Mr. Works’s sales?
Market IDSalesPrice  Competitor Price (Cprice)
12282.22.2
22162.72.9
32232.42.4
42072.92.6
52162.82.4
62472.22.5
72332.02.2
82492.32.7
92392.12.4
102092.72.4
112142.82.4
122362.63.0
132182.62.1
141912.92.2
152232.63.0

Answer & Explanation Solved by verified expert
4.1 Ratings (773 Votes)

Excel Results for multiple linear regression

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.899159
R Square 0.808488
Adjusted R Square 0.776569
Standard Error 7.453419
Observations 15
ANOVA
df SS MS F Significance F
Regression 2 2814.292 1407.146 25.32959 4.93E-05
Residual 12 666.6414 55.55345
Total 14 3480.933
Coefficients Standard Error t Stat P-value
Intercept 284.8645 22.03959 12.92513 2.11E-08
Price   -46.6048 6.807572 -6.84603 1.78E-05
Competitor Price (Cprice) 22.39825 6.962266 3.217092 0.007394

The regression equation is

Sales = 284.865 - 46.605 Price + 22.398 Cprice

Increase in 1 unit of Cprice increases the sales by 22.398 units keeping Price constant.

Increase in 1 unit of Price the sales of computer decreases by 46.605 units keeping the Cprice constant.

R2 = 0.8085 which means the model explains 80.85% variability in sales of computers with Price and Cprice as independent variables.
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