ABC Company has decided to use 20 test markets to examine the sensitivity of demand for its new product, Hand Sanitizer, to various prices, as shown in the following table.Each market had approximately the same level of business activity and population.

Test Market Quantity sold (Thousands of Pens) Price Charged (cent)

1 20 50

2 21 50

3 19 55

4 18 60

5 20 60

6 14 65

7 16 65

8 20 70

9 12 70

10 14 80

11 12 70

12 10 70

13 14 65

14 1690

1518 45

16 16 70

17 20 65

18 12 80

19 18 70

2010 50

Q.1. Using a linear regression model, estimate the demand function for ABC Company's new product, Hand sanitizer.

Q.2. Interpret the coefficient value of the independent variable of the estimated demand function.

Q.3. What will be the predicted/estimated sale for each price shown in column 2?

Q.4. Find the prediction interval at 95% for price of 70 cent.

Q.5. Interpret your prediction interval of Q.4.

Q.6. Conduct the hypothesis test at k=0.5:

(a) Set the null and alternative hypothesis

(b) Calculate standard deviation to calculate t-statistic

(c) Calculate t-statistic

(d) Find the critical value at k=.05 using the t-distribution table

(e) State the decision rule and apply your critical value to test the hypothesis

(f) Draw conclusion of your hypothesis test.

Q.7. Calculate the correlation coefficient for ABC Company.

Q.8. Find the value of coefficient of determination (r²).

Q.9. Interpret the coefficient of determination.