Demand Estimation
Elasticities for each independent variable with calculations Given that; P = 500, C = 600, I = 5500, A = 10000, and M = 5000, using the equation QD= – 5200 – 42P + 20PX + 5.2I + 0.20A + 0.25M, then QD =-5200-42*500+20*600+5.2*5500+0.2*10000+0.25*5000=17650 Using the formula, Price elasticity = (P/Q)*(dQ/dP) Drawing from the regression equation, dQ/dP = -42. (Coefficient of P) So, price elasticity EP= (P/Q) […]