Experimental Pricing As an Approach to Demand Analysis 23
The solution gave
bl = -4.792780
b2 = -5.821589
b3 = -9.040260
b4 = 1.728837
b5 = 2.202856
b6 = 3.682643
b7 = 2.063749
b, = 2.353265
ASSR1,2,3,4,5,6,7,8 = 4.216103.
The outcome of the test of Table 5 led to the decision that
the parameters of the quadratic function relating the logarithm
of the quantity to the logarithm of the price were not affected
by the "age" of the price. Therefore, form (C) of the model
was tentatively chosen.
TABLE 5.-TEST OF H3.
Source D.F. SS MS F
Remainder (1) .............. 54 4.315089
Reduction due to fitting
X,, Xs, X'., and X'lo .... 4 4.207578
Additional reduction due I
to fitting X'1, X'2, X'3,
X'4, X'5, X'0, X,, X... 4 0.008525 .002131 <1
Remainder (4) .............. 46 0.098986 .002152
Significance of Class Constants.-Although the acceptance of
form (C) settled the problem relating to the choice of a particu-
lar model form (i.e., function of a given degree), the prior as-
sumption that an appropriate model would contain all of the
previously specified class constants remained open to justifica-
tion. Hence, at this juncture, there arose the need to test
separately each of a series of hypotheses,22
H4 : = 0
"H5 : = 0
"H6 :k =0
"H7 il = 0
"2 More precisely, the test is for equality among the 68 s (likewise forai's
" *s and i's).