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Stonebuilt Concrete produces a specialty cement used in construction of roads. Stonebuilt is a price-setting firm and estimates the demand for its cement by the state department of transportation using a demand function in the nonlinear form: Q = a pb M pdR where Q= yards of cement demanded monthly, P= the price of Stonebuilt's cement per yard, M= state tax revenues per capita, and PR = the price of asphalt per yard. The manager at Stonebuilt transforms the nonlinear relation into a linear relation for estimation. The estimation results are presented below: DEPENDENT VARIABLE: LNQ R-SQUARE OBSERVATIONS: 64 F-RATIO 84.872 P-VALUE ON F 0.0001 0.8093 PARAMETER STANDARD VARIABLE ESTIMATE ERROR T-RATIO P-VALUE INTERCEPT 8.20 -3.54 0.64287 0.7854 2.04 -2.16 3.38 2.07 4.01 0.0461 LNP 0.0357 0.0014 0.0439 1.64 LNM 0.19 LNPR 0.38 If the price of asphalt (PR) decreases 15%, the estimated quantity of cement demanded will: Multiple Choice increase 5.2%. Increase 11.8%. increase 1.18% decrease 11.8%. decrease 5.2%,

Stonebuilt Concrete produces a specialty cement used in construction of roads. Stonebuilt is a price-setting firm and estimates the demand for its cement by the state department of transportation using a demand function in the nonlinear form: Q = a pb M pdR where Q= yards of cement demanded monthly, P= the price of Stonebuilt's cement per yard, M= state tax revenues per capita, and PR = the price of asphalt per yard. The manager at Stonebuilt transforms the nonlinear relation into a linear relation for estimation. The estimation results are presented below: DEPENDENT VARIABLE: LNQ R-SQUARE OBSERVATIONS: 64 F-RATIO 84.872 P-VALUE ON F 0.0001 0.8093 PARAMETER STANDARD VARIABLE ESTIMATE ERROR T-RATIO P-VALUE INTERCEPT 8.20 -3.54 0.64287 0.7854 2.04 -2.16 3.38 2.07 4.01 0.0461 LNP 0.0357 0.0014 0.0439 1.64 LNM 0.19 LNPR 0.38 If the price of asphalt (PR) decreases 15%, the estimated quantity of cement demanded will: Multiple Choice increase 5.2%. Increase 11.8%. increase 1.18% decrease 11.8%. decrease 5.2%,

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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Stonebuilt Concrete produces a specialty cement used in construction of roads. Stonebuilt is a price-setting firm and estimates the demand for its cement by the state department of transportation using a demand function in the nonlinear form: Q = a pb M pdr where Q= yards of cement demanded monthly, P= the price of Stonebuilt's cement per yard, M= state tax revenues per capita, and PR = the price of asphalt per yard. The manager at Stonebuilt transforms the nonlinear relation into a linear relation for estimation. The estimation results are presented below: F-RATIO 84.872 STANDARD P-VALUE ON F DEPENDENT VARIABLE: LNQ R-SQUARE OBSERVATIONS: 64 0.8093 0.0001 PARAMETER VARIABLE ESTIMATE ERROR T-RATIO P-VALUE INTERCEPT LNP 2.04 -2.16 3.38 0.0461 0.0357 0.0014 0.0439 8.20 4.01 -3.54 0.64287 0.7854 1.64 LNM 0.19 LNPR 0.38 2.07 If the price of asphalt (PR) decreases 15%, the estimated quantity of cement demanded will: Multiple Choice increase 5.2%. increase 11.8%. increase 1.18%. decrease 11.8%. decrease 5.2%.
Transcribed Image Text:Stonebuilt Concrete produces a specialty cement used in construction of roads. Stonebuilt is a price-setting firm and estimates the demand for its cement by the state department of transportation using a demand function in the nonlinear form: Q = a pb M pdr where Q= yards of cement demanded monthly, P= the price of Stonebuilt's cement per yard, M= state tax revenues per capita, and PR = the price of asphalt per yard. The manager at Stonebuilt transforms the nonlinear relation into a linear relation for estimation. The estimation results are presented below: F-RATIO 84.872 STANDARD P-VALUE ON F DEPENDENT VARIABLE: LNQ R-SQUARE OBSERVATIONS: 64 0.8093 0.0001 PARAMETER VARIABLE ESTIMATE ERROR T-RATIO P-VALUE INTERCEPT LNP 2.04 -2.16 3.38 0.0461 0.0357 0.0014 0.0439 8.20 4.01 -3.54 0.64287 0.7854 1.64 LNM 0.19 LNPR 0.38 2.07 If the price of asphalt (PR) decreases 15%, the estimated quantity of cement demanded will: Multiple Choice increase 5.2%. increase 11.8%. increase 1.18%. decrease 11.8%. decrease 5.2%.
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