A multiple regression analysis based on a data set that consists of 500 observations yielded the following estimated demand equation:
Q = 120 - 1.1P + 0.04I + 0.90A - 0.04PZ
Where P is price, I is income, A is advertising, and PZ is the price of a related good. If the standard errors of the independent variables are 0.25, 0.5, 0.3, and 0.01, respectively, which of the four variables should be dropped from the equation?
A) P
B) I
C) A
D) PZ
Correct Answer:
Verified
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