natasha saher eco

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MANAGERIAL ECONOMICS PROJECT

SUBMITTED BY:

NATASHA SAHER

SUBMITTED TO: SIR AHSAN RIZVI

CLASS: BBA-5G



Acknowledgements

In the name of ALMIGHTY ALLAH the most beneficent and the most merciful.

First of all I thank to ALMIGHTY ALLAH who enabled me the capability, power,

opportunity and intelligence to conduct the study.

I am thankful to acknowledge the constant guidance and encouragement by

supervisor, SIR AHSAN RIZVI. He made the course a valuable learning

experience for all of us and made us grow as learned individuals. We will always

be in debt for his affectionate attitude. We are also grateful to BAHRIA

UNIVERSITY, which helps students to engage in extra ± curricular activities to

enhance their experiences.

Hopefully this report will serve a good purpose.

Thank you



D ATA ANALYSIS D ESCRIPTION

The data is collected from the energy sector. The purpose of this data collection is

to study the relationship that how crude oil extraction and gas supply plays acrucial role in electricity (installed capacity). The data is collected from a renown

website of Pakistan

Here the dependent variable is Y which is ELECTRICITY (INSTALLED

CAPACITY) and its unit is THOUSANDS MEGAWATT. X1 represents the CRUDE

OIL EXTRACTION and its unit is MILLION BARRELS . X2 represents the GAS

SUPPLY and its unit is BILLION CUBIC FEET.

Thus:

Y = electricity (installed capacity).

X1 = crude oil extraction.

X2 = gas supply.

MUTIPLE REGRESSION EQUATION

Y^

= bo + b1x1 + b2x2

EQUATION: Y^

= -0.846+ 0.363 X1 + 0.009 X2



REGRESSION STATISTICS

bo

-0.846

b1 0.363

b2 0.009

R Square 0.827

Adjusted R Square 0.806

Observations 20

R SQUARE INTERPRETATION:

It means that variation in the crude oil extraction and gas supply explains 82.7 %

of the variation in electricity (installed capacity).



Hypothesis testing

T1:

Ho: b1 = 0

HA: b1 � 0

t , n-k

t0.05, 20-3

With the help of t distribution table we find the value of t which is given below:

t0.05, 17 = 2.110.

Through the available data we calculate t1 which is given below:

t1 = 2.458

Result:

Ho rejected.

INTERPRETATION:Ho is rejected which means that b1 is statistically significant. As Y is dependent

variable (electricity installed capacity) and X1 is an independent variable (crude oil

extraction).



T2:

Ho: b2 = 0

HA: b2 � 0

t , n-k

t0.05, 20-3

With the help of t distribution table we find the value of t which is given below:

t0.05, 17 = 2.110.

Through the available data we calculate t1 which is given below:

t2 = 4.084

Result:

Ho rejected.

INTERPRETATION:

Ho is rejected which means b2 is statistically significant. As Y is dependent

variable (electricity installed capacity) and X2 is an independent variable (gas

supply).



F-test

FORMULA:

F = R 2/ (k-1) / (1- R

2) / (n-k)

Ho: b1 = b2 = 0

HA: b1 = b2 � 0

Through table, we find that values of F 3.59.

Through calculation of the above data we calculate:

F = 40.520

Result:

Ho rejected.

INTERPRETATION:

HO is rejected and HA is accepted which shows that collective parameters are

significant and all coefficients are not equal to zero.



Summar y

The purpose of this report is to study the relationship that how crude oil extraction and gas

supply plays a crucial role in electricity (installed capacity). Since we are interested in doing

multiple regression of this data so we considered three variables X1, X2 and Y. Y represents the

electricity (installed capacity) while X1 represents the crude oil extraction and X2 represents the

gas supply. In the regression statistics of this data the calculated value of R 2 is 0.824 and the

value of adjusted R 2 is 0.806. Total number of observation considered is 20. In hypothesis testing

(t-test) we conclude that both parameters are statistically different from zero at the 5 percent

level of significance. In F-test, we conclude that collective parameters are significant and X1 and

X2 are independent and that there is no statistically significant relationship between the

independent and dependent variables which means that all coefficients are not equal to zero.



DATA:

s.no Years DEPENDENT

VARIABLE

INDEPENDENT

VARIABLESY = ELECTRICITY (

INSTALLED CAPACITY )

X1 = CRUDE OIL

EXTRACTION

X2 = GAS

SUPPLY

000 MEGAWATT MILLION BARRELS BILLION

CUBIC FEET

1. 1988-1989 1.30 2.80 165.40

2. 1989-1990 3.10 10.90 385.20

3. 1990-1991 12.90 26.10 908.00

4. 1991-1992 9.36 22.46 550.71

5. 1992-1993 10.586 21.89 583.546. 1993-1994 11.319 20.67 624.22

7. 1994-1995 12.10 19.90 628.20

8. 1995-1996 13.00 21.10 666.60

9. 1996-1997 14.70 21.30 697.60

10. 1997-1998 15.60 20.50 699.70

11. 1998-1999 15.60 19.70 744.90

12. 1999-2000 17.40 20.40 818.30

13. 2000-2001 17.50 21.00 857.40

14. 2001-2002 17.70 23.20 923.8015. 2002-2003 17.80 23.50 992.60

16. 2003-2004 19.20 22.60 1202.70

17. 2004-2005 19.40 24.10 1344.90

18. 2005-2006 19.40 23.90 1400.00

19. 2006-2007 19.40 24.60 1413.60

20. 2007-2008 19.40 25.60 1454.20

REFERENCE:http://www.finance.gov.pk/survey/chapter_10/13_Energy.pdf

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