A Large Auto Dealership Is Interested in Determining the Number

question 74

Essay

A large auto dealership is interested in determining the number of cars that will be sold in a given quarter. The management of the dealership believes that a relationship can be found between the number of cars sold (Y), the advertised price ( ) and the current interest rates ( ). Their past experience shows that they tend to have better luck using a non-linear relationship. Below is the output from a regression analysis using the natural logarithm of the variables in the model.
-(A) Use the information above to estimate the regression model.
(B) Interpret each of the estimated regression coefficients of the regression model in (A).
(C) Does using a non-linear model seem to be a good choice in this example? Explain your answer.

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Definitions:

Goods Held for Resale

Refers to items that a company has in its inventory that are purchased with the intention of being sold to customers rather than being used in the production process.

Gross Profit

The difference between sales revenue and the cost of goods sold before deducting overheads, payroll, taxation, and interest.

Operating Expenses

Costs incurred in the normal operations of a business, such as rent, utilities, and payroll.

Net Income

The conclusive financial gain of a company after expenses and taxes have been removed from the initial total revenue.