A multiple regression analysis based on a data set that consists of 505 observations yielded the following estimated demand equation:
Q = 50 - 2P + 0.01I + 0.01A
Where P is price, I is income, and A is advertising. If price is equal to $20, income is equal to $2,000, and advertising expenditures are equal to $5,000, then the predicted quantity demanded (Q) is
A) 20.
B) 40.
C) 60.
D) 80.

Question

Quizplus · Accepted Answer

The predicted quantity demanded can be calculated by substituting the given values into the estimated demand equation: Q = 50 - 2(20) + 0.01(2000) + 0.01(5000) = 50 - 40 + 20 + 50 = 80.

A Multiple Regression Analysis Based on a Data Set That