An estimate of the demand function for household furniture produced the following results: F = 0.0036 Y1.08 R0.16 p(-0.48) where Ffurniture expenditures per household Y disposable personal income per household R value of private residential construction per household P ratio of the furniture price index to the consumer price index r² = 0.996 The point price elasticity for household furniture is , and the income elasticity is According to the estimated model, a 10 percent increase in the value of private residential construction per household the quantity

An estimate of the demand function for household furniture produced the following results: F = 0.0036 Y1.08 R0.16 p(-0.48) where Ffurniture expenditures per household Y disposable personal income per household R value of private residential construction per household P ratio of the furniture price index to the consumer price index r² = 0.996 The point price elasticity for household furniture is , and the income elasticity is According to the estimated model, a 10 percent increase in the value of private residential construction per household the quantity

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4: Estimating Demand

Section: Chapter Questions

Problem 7E

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Question

An estimate of the demand function for household furniture produced the following results:
F = 0.0036 Y¹.08 R0.16 p(-0.48)
where
F = furniture expenditures per household
Y = disposable personal income per household
R = value of private residential construction per household
P = ratio of the furniture price index to the consumer price index
The point price elasticity for household furniture is
r² = 0.996
and the income elasticity is
According to the estimated model, a 10 percent increase in the value of private residential construction per household
demanded by
percent.
the quantity

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