The estimated log-linear regression, where PX the price of the product, PO the price of

The estimated log-linear regression, where PX ¼ the price of the product, PO ¼ the price of another product and Y ¼ real income, is as follows:

QX ¼ 450  1:53PX þ 0:87PO þ 2:36Y R2 ¼ 0:91 where the t-ratios are in parentheses.

^ Explain the meaning and signi¢cance of the coe⁄cients for each variable. Are the signs in line with economic theory?

^ If the initial values of the variables are PX ¼ »100, PO ¼ »120 and Y ¼ »1,000, then calculate the quantity demanded.

^ Calculate the impact on sales of a plus or minus change of 10 in the value of each of the independent variables on the quantity demanded.