QUESTION 4 (CLO3)

You have been presented with the following data and asked to fit statistical demand functions:

PERIOD	QUANTITY	PRICE	INCOME	ADVERTISING
1	120	8.00	10	3
2	165	4.00	22	7
3	120	7.00	20	5
4	165	3.00	20	8
5	180	4.00	30	8
6	90	10.00	19	6
7	150	4.00	18	10.2
8	190	1.60	25	9.3
9	160	5.00	30	8
10	200	2.00	35	9.5

Linear Relationship

1. Use any multiple regression packages to estimate a linear relationship between the dependent variable and the independent variables.
2. Is the estimated demand function "good"? Why or why not?

Non-linear relationship.

1. Select and estimate any form of non-linear relationship.
2. Is the estimated demand function "good"? Why or why not? Compare with the linear form above. Elaborate.