Exhibit 14-1An Express Delivery Service Company Recently Conducted a Study

question 14

Essay

Exhibit 14-1An express delivery service company recently conducted a study to investigate the relationship between the cost of shipping a package (Y), the package weight in pounds (X1), and the distance shipped in miles (X2). Twenty packages were randomly selected from among the large number received for shipment, and a detailed analysis of the shipping cost was conducted for each package. The sample information is shown in the table below:
$$\begin{array} { c c c } \text { Cost of Shipment } & \text { Package Weight } & \text { Distance Shipped } \\\$ 3.40 & 4.3 & 100 \\\$ 2.10 & 0.5 & 165 \\\$ 11.10 & 5.3 & 245 \\\$ 2.70 & 6.1 & 52 \\\$ 2.00 & 4.7 & 58 \\\$ 8.10 & 3.7 & 255 \\\$ 15.60 & 7.2 & 265 \\\$ 5.10 & 2.6 & 214 \\\$ 1.10 & 0.8 & 105 \\\$ 4.50 & 0.95 & 285 \\\$ 6.10 & 6.4 & 120 \\\$ 1.80 & 1.3 & 95 \\\$ 14.60 & 6.7 & 245 \\\$ 14.10 & 7.7 & 195 \\\$ 9.30 & 6.8 & 165 \\\$ 1.20 & 2.9 & 50 \\\$ 12.20 & 8.3 & 165 \\\$ 1.60 & 0.9 & 85 \\\$ 8.10 & 4.6 & 207 \\\$ 4.00 & 3.4 & 150\end{array}$$
-Refer to Exhibit 14-1. How does the R2 value for this multiple regression model compare to that of the simple regression model estimated above? Interpret the adjusted R2 values for the two models.

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Definitions:

Inelastic

Refers to a situation where the demand or supply of a good or service is relatively unresponsive to changes in price.

Price Effect

The impact on consumer demand and supply of goods caused by changes in the price of a product or service.

Quantity Effect

The impact on the total quantity bought or sold in a market as a result of changes in price.

Least Elastic

Refers to the good or service with the least sensitivity to changes in price, meaning the quantity demanded or supplied changes very little with price changes.