Just The Fax, Inc. (JTF) has hired you as a consultant to analyze the demand for its line of telecommunications devices in 35 different market areas. The available data set includes observations on the number of thousands of units sold by JTF per month (QX), the price per unit charged by JTF (PX), the average unit price of competing brands (PZ), monthly advertising expenditures by JTF (A), and average gross sales (in $1,000) of businesses in the market area (I). The results of a regression analysis (with standard errors in parenthesis) are given below.
QX = 300 - 6 PX + 2 PZ + 0.04 A + 0.01 I
(200) (1.8) (0.8) (0.03) (0.004)
R2 = 0.91 S.E.E. = 3.6
(i) Evaluate the statistical significance of the equation as a whole and of each of its coefficients.
(ii) The average values of the independent variables in the data set used to estimate the equation are PX = $195, PZ = $225, A = $11,000, and I = $200,000. Calculate a point estimate of JTF's average sales and a 95% interval estimate of sales based on these values.