. Given the MS Excel output in Question 1, please compare the two regression equations’ coefficient of determination (R-square), F-test and t-test. Which equation is a good (better) fit?

Demand can be estimated with experimental data, time-series data, or cross-section

data. In this case, cross-section data appear in the Excel file. Soft drink consumption in

cans per capita per year is related to six-pack price, income per capita, and mean

temperature across the 48 contiguous states in the United States.

QUESTIONS

1. Given the data, please construct the demand estimation for soft drink consumption in

the United States by

(1) a multiple-linear regression equation (10%), and

(2) a log-linear (exponential) regression equation (10%).

2. Given the MS Excel output in Question 1, please compare the two regression

equations’ coefficient of determination (R-square), F-test and t-test. Which equation

is a good (better) fit? Which equation shows the stronger overall significance to

predict the future demand? Which equation will you choose as a better estimation for

quantity demanded? Which equation will you choose as a better estimation for

elasticities? Explain your answer in the language of statistics. (20%)