Suppose Fiberboard Inc. estimated a demand function for the cardboard boxes it sells in a log-log fashion as:

[ln(Boxes)] = 90 - 2.4[ln P] + 1.5[ ln(M)] + 0.3 [ln(Advt)]

a. Suppose that the estimated standard error for the coefficient on price is 1.1. Can you rely on the estimated coefficient value? Why or why not?

b. Suppose the firm contemplates raising revenues by adjusting prices. What policy is most advisable from the demand function's information?

c. Suppose that a recession is forecasted so that incomes fall by 5%. How much would the price be adjusted to keep sales the same?