Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1.Functional Forms .Computer Project #3 covered functional forms estimated for a demand function.The following functional forms were estimated: M1.Q= -100 + -12(PB) + 40(Y) +

1.Functional Forms.Computer Project #3 covered functional forms estimated for a demand function.The following functional forms were estimated:

M1.Q= -100 + -12(PB) + 40(Y) + -5.0(PO)

M2.Ln(Q) =4.0 +-0.05(PB) + 0.2(Y) + -.06(PO)

M3.Ln(Q) = 11 + -0.09(Ln(PB)) + 1.8(Ln(Y)) + -0.11(ln(PO))

M4.Q = -180 + 40(1/PB) + 45(Y) + -10(PO)

where, Q = gallons of beer consumed per year, PB = price per gallon of beer ($'s), Y = income($1000's) and PO = the price of another good ($'s).

a.Determine the impact of the price and the income variable in M1.Be specific in terms of units.

b. Same question for M2.

c. What is the estimated price elasticity from M3.Is the demand elastic, inelastic or unit-elastic.

d.What is the estimated income elasticity from M3.Is beer a normal or inferior good?

e. Based on all four models, is the other good a substitute or complement to beer.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Theory Of Moral Sentiments

Authors: Adam Smith, D D Raphael

1st Edition

0865970122, 9780865970120

More Books

Students also viewed these Economics questions

Question

Explain the causes of indiscipline.

Answered: 1 week ago

Question

5. Explain the supervisors role in safety.

Answered: 1 week ago