ECO-Cars as the dependent variable and Price and Temperature

ECO-Cars as the dependent variable and Price and Temperature

Question
	
Use the attached light up data to run a regression with Cars as the dependent variable and Price and Temperature as independent variables for data from 1992 through 2012 (21 observations).

1. Extract and specify the demand equation.
2. How much multicollinearity is there in the model and how can you tell (fatal, high, moderate, low, almost none, none).
3. For a Price of $8 and an average December Temperature of 34 degrees what is the predicted number of Cars through the gate?
4. For a Price of $9 and an average December Temperature of 34 degrees, what is the predicted number of Cars through the gate?
5. Compute the arc-elasticity of demand in the price range $8 to $9.
6. Is demand arc-price elastic or arc-price inelastic in the price range $8 to $9?
7. For a Price of $10 and an average December Temperature of 34 degrees, what is the predicted number of Cars through the gate?
8. What is the point price elasticity if the Price is $10 and the average December Temperature is 34 degrees?
For the previous question is demand elastic or inelastic?


10. To increase revenue, should the Light Up managers increase, decrease, or freeze the price at $10?