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Homework answers / question archive / Question Three (10 Marks From the following is the regression output of the quantity demanded of a commodity (Y), its price (X1) and consumer income (X2) from 1986 to 2005 (10 Marks) SUMMARY OUTPUT Regression Statistics Multiple R 0
Question Three (10 Marks From the following is the regression output of the quantity demanded of a commodity (Y), its price (X1) and consumer income (X2) from 1986 to 2005 (10 Marks) SUMMARY OUTPUT Regression Statistics Multiple R 0.98398 R Square 0.968217 Adjusted R Square 0.964478 Standard Error 7.204988 Observations 20 ANOVA Regression Residual Total dr SS MS oni cancer 2 26884 3 13442 15 258.9418 1B6E-13 17 882 5015 51.9118S 19 27766.8 Intercept X1 X2 Coefficientandard Et Stat P-value Lower 95Upper 95ower 95.Oseper 95. ON 114.0738 29.93119 3.811201 0.001196 50.9245 177 2231 50.9245 177 2231 9.47019 1.8195R1 -5.2016 7.16E-05 - 13. 3092 -5.63121 13.3092 -5.63121 0.028937 0.006422 4.505861 0.000312 0.015387 0.042436 0.015187 0.012486 a. What is the interpretation of the coefficients on price (X1), and consumer income (X2); (4 Marks) b. Determine the commodity Y's quantity demanded and demand curve when price is $4; income is $3000. Show the demand curve when price is expressed as a function of quantity (6 Marks)
Q3)
(a) Interpretation of coefficients is as follows:
As the price increases by 1 unit, the quantity demanded falls by 9.47 units
As the consumer income increases by 1 unit, the quantity demanded increases by 0.0289 units
(b) The demand function is as follows:
Qd = 114.0738 - 9.47019*price + 0.028937*income
putting values we get,
Qd = 114.0738 - 9.47019*4 + 0.028937*3000 = 163
Price as a function of quantity is as follows:
9.47019*price = 114.0738 - Q
=> price = 114.0738/9.47019 - Q/9.47019
=> price = 12.0455 - 0.1056Q
