Question
Bachanta Mexican (BM) has collected data on price ($ per burrito) and quantity (of burritos) sold over the last ten years. The firm has also
Bachanta Mexican (BM) has collected data on price ($ per burrito) and quantity (of burritos) sold over the last ten years. The firm has also collected data on the price ($ per slice of pizza) charged by Luciano's Pizza (LP) and the percentage change of growth in consumer income. The data are as follows below in the table:
a. According to your results, are Pizza and Burrito substitutes or complements? Can you be 99% confident? Explain.
b. Is Burrito a normal or inferior good? Can you be 95% confident? Explain.
c. You wish to estimate the demand for Burrito Q = Ppp1 Pcc2. (Note that you are not including income in your multiplicative demand model.)
Provide the appropriate regression results.
Year | Quantity | Price | Price LP | Income Growth |
1 | 33,500 | 4.40 | 4.09 | -1 |
2 | 92,600 | 4.79 | 3.56 | 3 |
3 | 32,400 | 4.08 | 4.15 | 1 |
4 | 81,700 | 3.47 | 4.18 | 0 |
5 | 144,800 | 2.06 | 4.33 | 2 |
6 | 114,300 | 3.74 | 3.58 | 1 |
7 | 156,600 | 3.11 | 3.75 | 4 |
8 | 158,000 | 2.29 | 3.95 | 0 |
9 | 58,100 | 3.24 | 4.39 | 3 |
10 | 135,000 | 2.10 | 4.45 | 4 |
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