Question

You have estimated the following model for demand of grape juice using one
hundred observations.
Qg= 150.83–0.75Pg+ 0.37Po+0.65Y.
(0.04) (0.23) (0.02) (0.52)R-square=0.78
Where, Qg=quantitydemandedofgrapejuicebottles.
Pg=price ofgrapejuiceperunit.
Po=Priceoforangejuice.
Y=Income.
Standarderrorsareinparenthesis.
i)Interpret the results.

Answer 1

The results indicate that the quantity of grape juice demanded is positively related to income and negatively related to the price of grape juice and the price of orange juice. The model explains 78% of the variation in the quantity of grape juice demanded.