# Economics Colorful Tile Inc Question

### Description

Colorful Tile, Inc., is a rapidly growing chain of ceramic tile outlets that caters to the do-it-yourself home remodeling market. In 2020, 33 stores were operated in small to medium-size metropolitan markets. An in-house study of sales by these outlets revealed the following (standard errors or standard deviations are in parentheses)

*Q = 4 **â€“ **5P + 2A + 0.2I + 0.25HF*

(3) (1.8) (0.7) (0.1) (0.1)

*R**2 **= 0.93, standard error of the estimate (SEE) = 6*

Here, *Q *is tile sales (in thousands of cases), *P *is tile price (per case), *A *is advertising expenditures (in thousands of dollars), *I *is disposable income per household (in thousands of dollars), and *HF *is household formation (in hundreds).

(A) *Fully evaluate and interpret *these empirical results on an overall basis using *R**2**, adjusted R**2**, and F statistic*.

(B) *Which regression analysis problem might apply to this regression estimate? Why?*(C)Which independent variables are *statistically significant *at the 95% confidence level?(D)Is quantity demanded sensitive to own price (*P*)?

(E) Austin, Texas, was a typical market covered by this analysis. During 2020 in the Austin market, price (*P*) was $5, advertising (*A*) was $30,000, income (*I*) was an average $55,000 per household, and the number of household formations (*HF*) was 4000. *Calculate and interpret the relevant advertising point elasticity*.

(F) Given the values of the independent variables in part E above, give a *point estimate *and an*interval estimate *of Q with 95% confidence level.

(G)Assume that the preceding model and data are relevant for the coming period. Estimate the*probability that the Austin store will make a profitÂ *during 2021 if total costs are projected to be $300000.

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