3. Consider the following model of car sales: In (qnc) = ₁ + ß₂ ln (price) + Bing In (income)+u where qnc is the number of cars sold (in thousands), price is the average price of new cars (in $1,000), and income is the per capita income (in $1,000). Give the economic interpretation of the parameters Bo, Bp and Binc. What sign do you expect these parameters to have?

3. Consider the following model of car sales: In (qnc) = ₁ + ß₂ ln (price) + Bing In (income)+u where qnc is the number of cars sold (in thousands), price is the average price of new cars (in $1,000), and income is the per capita income (in $1,000). Give the economic interpretation of the parameters Bo, Bp and Binc. What sign do you expect these parameters to have?

Principles of Macroeconomics (MindTap Course List)

7th Edition

ISBN:9781285165912

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter11: Measuring The Cost Of Living

Section: Chapter Questions

Problem 3PA

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Question

3. Consider the following model of car sales:
In (qnc)= B, + B, In(price)+ Bme In (income)+ u
where qnc is the number of cars sold (in thousands), price is the average price of new
cars (in $1,000), and income is the per capita income (in $1,000).
Give the economic interpretation of the parameters Bo, Bpand Bine. What sign do you
expect these parameters to have?

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