QUESTION TWOIvy, a General Manager at Mumias Sugar Company, estimated a multiplicative demandfunction of the form: Qd = aPapIªiPoª• _using a cross-section data collected in thecompany sales on 30th June, 2016. The estimation results are as follows:ConstantPrice (P) Income (I) Price of Other Good (P0)Estimated coefficient0.022-0.2231.3540.133Standard Error0.0120.0560.5020.814t-statistic(1.19)(-3.98)-2.69-0.13Number of Observations, n = 210; R-squared = 0.7516Critical Students' t = 1.96 at 5% Level of Significancea) How would the coefficients and R² value be interpreted?b) What will the quantity demanded be if the values of the independent variables are:Price = 20; Income per capita = Ksh 500; and the Price of the Other Good = Ksh 30?

(i) The intercept value is 0.022, which means that if P, I and P0 are zero each, minimum sales will…

Answered: Ivy, a General Manager at Mumias Sugar…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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