Managerial Economics in a Global Economy Chapter 4 The Nature and Scope of Managerial Economics PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
The Identification Problem PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Demand Estimation: Marketing Research Approaches Consumer Surveys Observational Research Consumer Clinics Market Experiments Virtual Shopping Virtual Management PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Regression Analysis Scatter Diagram PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Regression Analysis Regression Line: Line of Best Fit Regression Line: Minimizes the sum of the squared vertical deviations (et) of each point from the regression line. Ordinary Least Squares (OLS) Method PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Regression Analysis PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Ordinary Least Squares (OLS) Model: PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Ordinary Least Squares (OLS) Objective: Determine the slope and intercept that minimize the sum of the squared errors. PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Ordinary Least Squares (OLS) Estimation Procedure PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Ordinary Least Squares (OLS) Estimation Example PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Ordinary Least Squares (OLS) Estimation Example PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Standard Error of the Slope Estimate Tests of Significance Standard Error of the Slope Estimate PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Tests of Significance Example Calculation PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Tests of Significance Example Calculation PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Tests of Significance Calculation of the t Statistic Degrees of Freedom = (n-k) = (10-2) = 8 Critical Value at 5% level =2.306 PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Tests of Significance Decomposition of Sum of Squares Total Variation = Explained Variation + Unexplained Variation PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Decomposition of Sum of Squares Tests of Significance Decomposition of Sum of Squares PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Coefficient of Determination Tests of Significance Coefficient of Determination PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Coefficient of Correlation Tests of Significance Coefficient of Correlation PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Multiple Regression Analysis Model: PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Multiple Regression Analysis Adjusted Coefficient of Determination PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Multiple Regression Analysis Analysis of Variance and F Statistic PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Problems in Regression Analysis Multicollinearity: Two or more explanatory variables are highly correlated. Heteroskedasticity: Variance of error term is not independent of the Y variable. Autocorrelation: Consecutive error terms are correlated. PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Durbin-Watson Statistic Test for Autocorrelation If d=2, autocorrelation is absent. PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Steps in Demand Estimation Model Specification: Identify Variables Collect Data Specify Functional Form Estimate Function Test the Results PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Functional Form Specifications Linear Function: Power Function: Estimation Format: PowerPoint Slides by Robert F. Brooker Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.