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Q. A food products company has recently introduced a new line of fruit pies in six US cities: Atlanta, Baltimore, Chicago, Denver, St Louis and Fort Lauderdale. Based on pies apparent success, company is considering a nationwide launch. Before doing so, it has decided to use data collected during a two-year market test to guide it into setting costs and forecasting future demand.
For each of six markets, industry has collected eight quarters of data for a total of 48 observations. Each observation consists of data on quantity demanded (number of pies purchased per week), cost per pie, competitor's average cost per pie, income and population. Company has also included a time-trend variable for each observation. A value of 1 denotes first quarter observation, 2 second quarter and so on, up to 8 for eighth and last quarter.
A). Which of explanatory variables in regression are statistically significant? Elucidate.
How much of total variation in pie sales does regression model elucidate?
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