{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

mgr econ 3

# mgr econ 3 - Consider the following nonlinear demand...

This preview shows pages 1–2. Sign up to view the full content.

Consider the following nonlinear demand function, which is estimated for a price-setting firm. The method of least-squares is used to estimate the parameters: Q = a P b M c P R d Where P is the price of the good, M is income, and P R is the price of a related good. The results of the estimation are: Dependent Variable: ln Q R-Square F-Ratio P-Value on F Observations: 26 0.9248 90.18 0.0001 Parameter Standard Variable Estimate Error T-Ratio P-Value Intercept 3.04 1.01 3.01 0.0064 ln P -1.90 0.48 -3.96 0.0007 ln M 2.16 0.675 3.20 0.0041 ln P R 0.78 0.169 4.62 0.0001 a. Before the nonlinear demand equation can be estimated using regression analysis, the demand equation must be transformed into the following linear form: ln Q = ln a+b ln P+ c ln M+ dln P R b. Are the parameter estimates statistically significant at the 5 percent level of significance? The parameters are statistically significant at the 5 percent level of significance. The t-ratios are larger than 2.074. c.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 2

mgr econ 3 - Consider the following nonlinear demand...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online