The demand for haddock has been estimated as:
Log Q = a + b log (P) + c I log (I) + d log (Pm)
Where Q = Quantity of haddock sold in New England
P = price per pound of haddock
I = a measure of personal income in the New England region
Pm= an index of the price of meat and poultry
If b = -2.174, c = .461, and d = 1.909,
1. Determine the price elasticity of demand.
2. Determine the income elasticity of demand.
3. Determine the cross elasticity of demand.
4. How would you characterize the demand for haddock?
Suppose disposable income in expected to increase by 5 percent next year. Assuming all other factors remains constant, forecast the percentage change in the quantity of haddock demanded next year.