Case Study-Sting Ray Study Example | Topics and Well Written Essays - 500 words

-Sting Ray - Case Study ExamplePoolVac also wishes to use its sales data for the last 26 quarters to estimate rent for its Sting Ray.Demand for Sting Rays is specified to be a linear function as the following1. Run the appropriate regression to estimate the average covariant cost function (AVC) for Sting Rays. Evaluatethe statistical significance of the three estimated parameters using a significance level of 5 percent. Be sure tocomment on the algebraic signs of the three parameter estimates. (30%)At a confidence level of 95% (5% level of significance), all the three parameters are significant, as they have a p-value of slight than 0.05. Notably, a (intercept) has a p-value of 1.96*10-17, while the coefficients b and have p values of 0.000342 and 0.01299, respectivelyThe model implies that average variable costs is a function of some(prenominal) Q and square of Q. the first parameter, intercept is 152, implying that the expected average cost at constant quantity is 152. As quan tity varies, average cost will switch directly with Q2 (positive parameter) and inversely with the quantity (negative coefficient). Notably an increase in quantity does not necessarily increase average variable cost, the effect depends on which variable(either Q or Q2 ) has a greater influence.Evaluate the statistical significance of the three estimated slope parameters using a significance level of 5percent. Discuss the appropriateness of the algebraic signs of from each one of the three slope parameter estimates.(20%)h= 3.166Ph and p-value of 0.027, implies that holding price and income constant, If competitors reduce their prices by a unit, customers shift from sting ray to its substitutes hence demand reduces by 3.166 units and vice versa.5. The manager at PoolVac, Inc. believes Howard Industries is going to price its automatic pool cleaner at $250,and average household income in the U.S. is expected to be $65,000. exploitation the regression results from Question 4, write th e estimated demand function (with only P as