1. Managerial Economics Demand Estimation

2. Scatter Diagram Regression Analysis

3. Regression Line: Line of Best Fit Regression Line: Minimizes the sum of the squared vertical deviations (e t ) of each point from the regression line. Ordinary Least Squares (OLS) Method

4. Regression Analysis

5. Ordinary Least Squares (OLS) Model:

6. Ordinary Least Squares (OLS) Objective: Determine the slope and intercept that minimize the sum of the squared errors.

7. Ordinary Least Squares (OLS) Estimation Procedure

8. Ordinary Least Squares (OLS) Estimation Example

9. Ordinary Least Squares (OLS) Estimation Example

10. Tests of Significance Standard Error of the Slope Estimate

11. Tests of Significance Example Calculation

12. Tests of Significance Example Calculation

13. Tests of Significance Calculation of the t Statistic Degrees of Freedom = (n-k) = (10-2) = 8 Critical Value at 5% level =2.306

14. Tests of Significance Decomposition of Sum of Squares Total Variation = Explained Variation + Unexplained Variation

15. Tests of Significance Decomposition of Sum of Squares

16. Tests of Significance Coefficient of Determination

17. Tests of Significance Coefficient of Correlation

18. Multiple Regression Analysis Model:

19. Multiple Regression Analysis Adjusted Coefficient of Determination

20. Multiple Regression Analysis Analysis of Variance and F Statistic

21. Steps in Demand Estimation Model Specification: Identify Variables Collect Data Specify Functional Form Estimate Function Test the Results

22. Functional Form Specifications Linear Function: Power Function:Estimation Format: