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21 Feb 2018
The following question refers to this regression equation. (Standard errors in parentheses)
Qd= 15 - 10 P + 1.5 Adv + 0.4 Px + 2 I
(5.23) (2.29) (0.525) (1.75) (1.5)
R^2 = 0.65
N = 120
F = 35.25
Standard error of Y estimate = 0.565
Qd = Quantity demanded
Consider the case when:
P = Price = 7
Adv = Advertising expense = 54
Px = price of competitor's good = 8
I = average monthly income = 4
a. Calculate the elasticity for each variable at that point and briefly comment on what information this gives you for each variable.
b. Should this firm be concerned if macroeconomic forecasters predict a recession? Explain your answer.
The following question refers to this regression equation. (Standard errors in parentheses)
Qd= 15 - 10 P + 1.5 Adv + 0.4 Px + 2 I
(5.23) (2.29) (0.525) (1.75) (1.5)
R^2 = 0.65
N = 120
F = 35.25
Standard error of Y estimate = 0.565
Qd = Quantity demanded
Consider the case when:
P = Price = 7
Adv = Advertising expense = 54
Px = price of competitor's good = 8
I = average monthly income = 4
a. Calculate the elasticity for each variable at that point and briefly comment on what information this gives you for each variable.
b. Should this firm be concerned if macroeconomic forecasters predict a recession? Explain your answer.
Trinidad TremblayLv2
21 Feb 2018
