A manufacturer of computer workstations gathered average monthly

A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product:

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Q =  +15,000 – 2.80P + 150A + 0.3Ppc + 0.35Pm + 0.2Pc

= 15,000- 2.80 (7000) + 150 (52) + .3 (4000) + .35 (15000) + .2 (8000)

= 11250

            (5,234)    (1.29) (175)  (0.12)   (0.17) (0.13)

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            R2 = 0.68   SEE  = 786   F  = 21.25

The variables and their assumed values are

Q = Quantity

P= Price of basic model = 7,000

          A = Advertising expenditures (in thousands) = 52

      Ppc = Average price of a personal computer = 4,000

       Pm = Average price of a minicomputer = 15,000

 

        Pc = Average price of a leading competitor’s workstation = 8,000

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