3. As the owner of an ice-cream store, you believe it is necessary to purchase another ice-cream maker to meet the increased demand. You need to take a loan to finance it. The loan officer tells you that your revenues of $750,000 are insufficient to support additional debt. To qualify for the loan, your revenues need to be $50,000 higher. To generate additional revenue, you collect data on the price (in cents) per pound you charge customers and the related quantity of ice-cream consumed per year in pounds. The information is saved in HW3_2.xlsx. Use these data to estimate the log-linear demand specification to obtain least squares estimated of the demand for ice-cream. Write an equation that summarizes the demand for ice cream, and then determine the percentage price increase or decrease that is needed in order to boost revenues by $50,000.
3. As the owner of an ice-cream store, you believe it is necessary to purchase another ice-cream maker to meet the increased demand. You need to take a loan to finance it. The loan officer tells you that your revenues of $750,000 are insufficient to support additional debt. To qualify for the loan, your revenues need to be $50,000 higher. To generate additional revenue, you collect data on the price (in cents) per pound you charge customers and the related quantity of ice-cream consumed per year in pounds. The information is saved in HW3_2.xlsx. Use these data to estimate the log-linear demand specification to obtain least squares estimated of the demand for ice-cream. Write an equation that summarizes the demand for ice cream, and then determine the percentage price increase or decrease that is needed in order to boost revenues by $50,000.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:3. As the owner of an ice-cream store, you believe it is necessary to purchase another ice-cream maker
to meet the increased demand. You need to take a loan to finance it. The loan officer tells you that
your revenues of $750,000 are insufficient to support additional debt. To qualify for the loan, your
revenues need to be $50,000 higher. To generate additional revenue, you collect data on the price (in
cents) per pound you charge customers and the related quantity of ice-cream consumed per year in
pounds. The information is saved in HW3_2.xlsx. Use these data to estimate the log-linear demand
specification to obtain least squares estimated of the demand for ice-cream. Write an equation that
summarizes the demand for ice cream, and then determine the percentage price increase or decrease
that is needed in order to boost revenues by $50,000.
Transcribed Image Text:In (Quant In (Price)
0.85
2.38
0.95
2.36
1.04
2.34
1.08
2.33
1.15
2.28
1.18
2.30
1.20
2.23
1.23
2.20
1.30
2.18
1.32
2.12
2.11
2.08
2.11
2.09
2.04
2.05
2.08
2.04
2.04
2.04
2.00
1.34
1.36
1.36
1.40
1.38
1.45
1.48
1.48
1.49
1.52
1.56
1.56
1.57
1.56
1.56
1.56
1.58
1.59
1.62
1.66
1.65
1.67
1.68
1.69
1.72
1.74
1.75
1.77
1.79
1.82
1.84
1.99
2.00
2.11
2.04
2.05
2.00
1.95
1.96
1.95
1.93
1.88
1.85
1.83
1.85
1.78
1.83
1.78
1.81
1.82
1.78
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