Question 1nbsp a quant jock from your firm used a linear

Question

QUESTION 1:  A quant jock from your firm used a linear demand specification to estimate the demand for its product and sent you a hard copy of the results. Unfortunately, some entries are missing because the toner was low in her printer. Use the information presented below to find the missing values. Then, answer the accompanying questions.

Instructions: Do not round intermediate calculations. Round only your final calculation. Round your final answers to 2 decimal places. Include a minus (-) sign for all negative answers.

SUMMARY OUTPUT
Regression Statistics
Multiple R	0.38
R Square	'1'
Adjusted R Square	'2'
Standard Error	20.77
Observations	150
Analysis of Variance
	Degrees of Freedom	Sum of Squares	Mean Square	F	Significance F
Regression	2	'3'	5199.43	12.05	0.00
Residual	147	63,408.62	431.35
Total	'4'	73,807.49
	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%
Intercept	58.87	'5'	3.84	0.00	28.59	89.15
Price of X	-1.64	0.85	'6'	0.06	-3.31	0.04
Income ('000s)	'7'	0.24	4.64	0.00	0.63	1.56

a. Based on these estimates, write an equation that summarizes the demand for the firm's product.

Instructions: Round your responses to 2 decimal places. Do not round intermediate calculations. Round only your final calculation.

Q_X^d =            -          P_X +           M

Please write complete this equation.

b. Which regression coefficients are statistically significant at the 5 percent level?

QUESTION 2: The demand function for good X is lnQ_X^d = a + b lnP_X + c lnM + e, where P_x is the price of good X and M is income. Least squares regression reveals that:

  â= 7.42    b^ =-2.18  c^ =0.34

a. If M  = 55,000 and P_x = 4.39, compute the own price elasticity of demand based on these estimates. Determine whether demand is elastic or inelastic.

Own price elasticity of demand:   ?

Demand is   ?

b. If M = 55,000 and P_x = 4.39, compute the income elasticity of demand based on these estimates. Determine whether X is a normal or inferior good.

Income elasticity of demand:  ?

X is  ?