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An estimate of the demand function for household furniture produced the following results: F = 0.0036Y1.08 R0.16 P-0.48 r2 = 0.996 Where F = furniture expenditures per household Y = disposable personal income per household R = value of private residential construction per household P = ratio of the furniture price index to the consumer price index
a. Determine the point price and income elasticity’s for household furniture.
b. What interpretation would you give to the exponent for R? Why do you suppose R was included in the equation as a variable?
c. If you were a supplier to the furniture manufacturer, would you have preferred to see the analysis performed in physical sales units rather than dollars of revenue? How would this change alter the interpretation of the price coefficient, presently estimated -0.48
Elucidate how that the regression R^2 in the regression. The assumption that more is better satisfied for both goods.
Firm manufactures bicycle component upgrade kits. Kits have a short-run average variable cost of $48 and are sold for $66 each. What is breakeven level of daily output for firm.
Which among the equation will you choose for a better demand estimation. Illustrate answer in the language of statistics.
A major employer in a small town announces upcoming major layoffs of employees. What should we expect to happen to the consumption functions of the affected employees.
. Abstracting out this income effect would leave the quantity of X unchanged. On the other hand, beyond the switch point, only Y is consumed and no changes in Px will have any income or substitution effect.
Joe's search costs are $7 per search. He wants to buy a DVD player for his wife for Christmas and lowest price he's found so far is $200. Should Joe continue to search or buy a DVD player at a price of $200.
If the government imposes a ceiling of $6 on the price of the firm's product, Illustrate what output will the firm produce also Illustrate what will be total profits.
Give an example of how nations can benefit from trade on the basis of comparative advantage. Explain how both parties can share in the gains from trade.
Distinguish between the resources market and the product market in the circular flow model.
Calculate consumption expenditures as a percent of real GDP for all years and calculate GDP growth in 2011 and 2012.
What is approximately maximum amount rm is willing to pay to be allowed to use e more units of input x, for e small.
Explain what percentage change in the price of each of the three goods. Using a method similar to the consumer price index, compute the percentage change in the overall price level.
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