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Question 2 The following demand equation was estimated of mineral water consumption (n = 60): InQ=1.5-0.75 In P+0.25 In P R²=0.68 where Q: mineral water sold in million liters in area i P price of mineral water per liter (in ringgit) in area i P*: average price of carbonated soda beverage per can (in ringgit) in area i. a. Interpret the slope coefficients of the estimated model. b. Interpret the R² value. c. Is the sign of the estimated coefficient of Pi* consistent with your theoretical expectation? Explain.

Question 2 The following demand equation was estimated of mineral water consumption (n = 60): InQ=1.5-0.75 In P+0.25 In P R²=0.68 where Q: mineral water sold in million liters in area i P price of mineral water per liter (in ringgit) in area i P*: average price of carbonated soda beverage per can (in ringgit) in area i. a. Interpret the slope coefficients of the estimated model. b. Interpret the R² value. c. Is the sign of the estimated coefficient of Pi* consistent with your theoretical expectation? Explain.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question 2 The following demand equation was estimated of mineral water consumption (n = 60): In Q=1.5-0.75 In P, +0.25 In P R²=0.68 where Q mineral water sold in million liters in area i P price of mineral water per liter (in ringgit) in area i P*: average price of carbonated soda beverage per can (in ringgit) in area i. a. Interpret the slope coefficients of the estimated model. b. Interpret the R² value. c. Is the sign of the estimated coefficient of Pi* consistent with your theoretical expectation? Explain.
Transcribed Image Text:Question 2 The following demand equation was estimated of mineral water consumption (n = 60): In Q=1.5-0.75 In P, +0.25 In P R²=0.68 where Q mineral water sold in million liters in area i P price of mineral water per liter (in ringgit) in area i P*: average price of carbonated soda beverage per can (in ringgit) in area i. a. Interpret the slope coefficients of the estimated model. b. Interpret the R² value. c. Is the sign of the estimated coefficient of Pi* consistent with your theoretical expectation? Explain.
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