Use the following information to answer the following question.The following linear demand specification is estimated for Spiker Drones, aprice-setting firm:Q= a + bP + CM + DPRwhere Q is the quantity demanded for the product Spiker Drones sells, P is theprice of that product, M is the income, and PR is the price of a relatedgood. The results of the estimation are presented below:DEPENDENT VARIABLE: QOBSERVATIONS:32R-SQUARE0.7984F-RATIOP-VALUE ON F36.140.0001PARAMETERVARIABLEESTIMATESTANDARDERRORT-RATIOP-VALUEINTERCEPT846.3076.7011.030.0001P-8.602.60-3.310.0026M0.01840.00483.830.0007PR-4.30751.230-3.500.0016Assume that the income is $10,000, the price of the related good is $40, andSpiker Drones sets the price of this product at $30. At the prices and incomegiven above, what is the income elasticity?A. -1.62B. -0.87C. 0.21D. 0.31E. None of the above.

Income elasticity is the measure of the change in the income of the consumer affecting the quantity…

Use the following information to answer the following question. The following linear demand specification is estimated for Spiker Drones, a price-setting firm: Q=a+bP+CM + DPR where Q is the quantity demanded for the product Spiker Drones sells, P is the price of that product, M is the income, and PR is the price of a related good. The results of the estimation are presented below: DEPENDENT VARIABLE: Q OBSERVATIONS: 32 R-SQUARE F-RATIO 0.7984 36.14 P-VALUE ON F 0.0001 PARAMETER STANDARD VARIABLE ESTIMATE ERROR T-RATIO P-VALUE INTERCEPT 846.30 76.70 11.03 0.0001 P -8.60 2.60 -3.31 0.0026 M 0.0184 0.0048 3.83 0.0007 PR -4.3075 1.230 -3.50 0.0016 Assume that the income is $10,000, the price of the related good is $40, and Spiker Drones sets the price of this product at $30. At the prices and income given above, what is the income elasticity? A. -1.62 B. -0.87 C. 0.21 D. 0.31 E. None of the above.

Use the following information to answer the following question. The following linear demand specification is estimated for Spiker Drones, a price-setting firm: Q=a+bP+CM + DPR where Q is the quantity demanded for the product Spiker Drones sells, P is the price of that product, M is the income, and PR is the price of a related good. The results of the estimation are presented below: DEPENDENT VARIABLE: Q OBSERVATIONS: 32 R-SQUARE F-RATIO 0.7984 36.14 P-VALUE ON F 0.0001 PARAMETER STANDARD VARIABLE ESTIMATE ERROR T-RATIO P-VALUE INTERCEPT 846.30 76.70 11.03 0.0001 P -8.60 2.60 -3.31 0.0026 M 0.0184 0.0048 3.83 0.0007 PR -4.3075 1.230 -3.50 0.0016 Assume that the income is $10,000, the price of the related good is $40, and Spiker Drones sets the price of this product at $30. At the prices and income given above, what is the income elasticity? A. -1.62 B. -0.87 C. 0.21 D. 0.31 E. None of the above.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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