Techbirds (Pty) Ltd is a national retailer of computer products and accessories that includes a very popular high-tech touch screen laptop. The company has 60 branches across the country. Techbirds’ research team had gathered the average monthly sales figures for the laptop for the past 12 months from all its branches and developed the following demand equation for its product:
Q = 15 000 – 2.8PHT + 150A + 0.3PSL + 0.35PDC + 0.2P LC
(5.2) (1.29) (175) (0.12) (0.17) (0.13) (SEE)
R2 = 0.68 SEE = 786 F = 21.25
The independent variables and their values are:
• Q = quantity demanded
• PHT = Price of high-tech touch screen laptop = R7 000
• A = Advertising expenditure (units of measurement is R1 000) = 52
• PSL = Average price of company’s standard laptops = R4 000
• PDC = Average price of company’s desktop computers = R15 000
• PLC = Average price of leading competitor’s best-selling laptop = R8 000
Required Note:
• Where relevant, show all calculations including relevant formulas.
• Where relevant, apply the "Rule of 2" for t-testing.
Calculate the elasticities for the high-tech laptop (PHT) and advertising expenditure
