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The Engle expenditure curve relates a consumer's expenditure on a commodity to his or her total income. Letting Y = Sale of the firm (in
The Engle expenditure curve relates a consumer's expenditure on a commodity to his or her total income. Letting Y = Sale of the firm (in $) and X = advertisement expenditures (in $), consider the following models. Ye = 1.7 + 2.3X; Ye = 2 + 1.5 () InY, = 0.03 + 0.073InX, InY, = 0.02 + 0.08 P. = 0.01 + 3.2InX; a. Interpret the above models. b. Which of these model(s) would you choose to relate the sale with the advertisement expenditures and why
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