For economic tutor

1. C hez Henri is a restaurant chain that operates in 40 different cities. It hired an economist to estimate the factors affecting the demand for its sales. The following equation was estimated using cross sectional data from each of its 40 restaurants.

Y

Annual restaurant sales (in thousands)

X1

Disposable per capital income (in thousands) of the residents living within

 

5 miles of a restaurant

X2

Population (in thousands) within a 5-mile radius of a restaurant

X

3

Number of competing restaurants within a 5-mile radius

The following information was obtained from the regression analysis: Multiple R: 0.92 R-Square: 0.85 Std. Error of Est.: 0.40

 

 

 

 

 

 

 

 

 

 

 

X1

 

X2

 

X3

 

Analysis of Variance

 

DF      

Sum Squares    

Mean Sqr.       

F-Stat 

Regression

3

220

73.3              

18.2

Residual 

36

60

1.7

 

Variable

Coefficient

Std. Error           

T-Value

Constant

0.4                       

0.2                      

2.0

0.01                    

0.004

2.5

0.02                    

0.015

1.3

-20.2

4.50                     

-4.6

Answer

the following questions: a. Give the estimated demand equation for predicting restaurant sales. b. Provide an interpretation for each of the regression coefficients. c. Which of the coefficients are statistically significant and which are not? Explain. d. What percent of variation are restaurant sales explained by this equation?

Answer

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