One of the leading refrigerator producers has estimated the following demand equation after analyzing 36 regional markets:

Q = + 25,000 – 45P + 20A + 25_Pc - 30_Ac + 110 I

(12000) (20.2) (14) (9) (48) (50)

R2 = 0.86 F = 28.52

The variables and their assumed values are

Q = Quantity

P = Price of the basic Model = 1200 (dollars)

A = Advertising Expenditures = 90 (thousand dollars)

P_c= Average price of the competitor’s product = 1400 (dollars)

A_c= competitor’s advertising expenditures = 80 (thousand dollars)

I = per capita income = 60 (thousand dollars)

What proportion of the variation in sales is explained by the independent variables in the equation? How confident are you about this answer? Explain conducting an F-test.