Chapter 4: Estimating Demand 127 Questions 1. Estimate the demand for soft drinks using a multiple regression program available on your computer. 2. Interpret the coefficients and calculate the price elasticity of soft drink demand. 3. Omit price from the regression equation and observe the bias introduced into the parameter estimate for income. 4. Now omit both price and temperature from the regression equation. Should a mar- keting plan for soft drinks be designed that relocates most canned drink machines into low-income neighborhoods? Why or why not? TABLE 1 SOFT DRINK DEMAND DATA (AVAILABLE AS AN EXCEL FILE ON THIS BOOK'S WEB SITE) CANS/CAPITA/YR 6-PACK $ PRICE INCOME $/CAPITA MEAN TEMP. F Alabama 200 2.19 13 66 Arizona 150 1.99 17 62 Arkansas 237 1.93 11 63 California 135 2.59 25 56 Colorado. 121 2.29 19 52 Connecticut 118 2.49 27 50 Delaware 217 1.99 28 52 Florida 242 2.29 18 72 Georgia 295 1.89 14 64 Idaho 85 2.39 16 46 Illinois 114 2.35 24 52 Indiana 184. 2.19 20 52 Iowa 104 2.21 16 50 Kansas 143 2.17 17 56 Kentucky 230 2.05 13 56 Louisiana. 269 1.97 15 69 Maine. 111 2.19 16 41 Maryland 217 2.11 21 54 Massachusetts 114 2.29 22 47 Michigan 108 2.25 21 47 Minnesota 108 2.31 18 41 Mississippi 248 1.98 10 65 Missouri 203 1.94 19 57 Montana 77 2.31 19 44 Nebraska 97 2.28 16 49 Nevada 166 2.19 24 48 New Hampshire 177 2.27 18 35 New Jersey 143. 2.31 24 54 New Mexico 157 2.17 15 56 New York 111 2.43 25 48 North Carolina 330 1.89 13 59 North Dakota 63 2.33 14 39 Ohio 165 2.21 22 51 (continued) 128 Part II: Demand and Forecasting 6-PACK INCOME CANS/CAPITA/YR S PRICE $/CAPITA MEAN TEMP. "F Oklahoma 184 2.19 16 82 Oregon 68 2.25 19 51 Pennsylvania 121 2.31 20 50 Rhode Island 138 2.23 20 50 South Carolina 237 1.93 12 65 South Dakota 95 2.34 13 45 Tennessee 236 2.19 13 60 Texas 222 2.08 17 69 Utah 100 2.37 16 50 Vermont 64 2.36 16 44 Virginia 270 2.04 16 58 Washington 77 2.19 20 49 West Virginia 144 2.11 15 55 Wisconsin 97 2.38 19 46 Wyoming 102 2.31 19 46