1) You are the manager of a large automobile dealership who wants to learn more about the effectiveness of various discounts offered to customers over the past 14 months. Following are the average negotiated prices for each month and the quantities sold of a basic model (adjusted for various options) over this period of time.

a. Estimate the demand equation and explain the regression results. What do the regression results indicate about the desirability of discounting the price?

Variable Coefficient Std. Error T-Stat. 2-Tail Sig. C 91.322086 11.404689 8.0074157 0.000 Price -0.0060524 0.0009809 -6.1701311 0.000 R-squared 0.760338 Mean of dependent var 21.07143 Adjusted R-squared 0.740366 S.D. of dependent var 4.843144 S.E. of regression 2.467789 Sum of squared resid 73.07979 Durbin-Watson stat 1.758028 F-statistic 38.07052Month Price Quantity January $12,500 15 February $12,200 17 Regression Output March $11,900 16 Constant 91.32209 April $12,000 18 Std. Err. of Y Est. 2.467789 May $11,800 20 R. Squared 0.760338 June $12,500 18 No. of Observations 14 july $11,700 22 Degrees of Freedom 12 August $12,100 15 September $11,400 22 October $11,400 25 X Coefficient(s) -0.00605 November $11,200 24 Std. Err. of Y Est. 0.000981 December $11,000 30 January $10,800 25 February $10,000 28Students Total Fixed Cost Total Variable Total Cost Marginal cost Average Total Cost Cost 500 $60 million $ 20 million 1,000 60 million 40 million 1,500 60 million 60 million 2,000 60 million 80 million 2,500 60 million 100 million