Ivy, a General Manager at Mumias Sugar Company, estimated a multiplicative demand function of the form: Qa = aPªp[ª%Poª• using a cross-section data collected in the company sales on 30th June, 2016. The estimation results are as follows: Constant Price (P) Income (I) Price of Other Good (P0) Estimated coefficient 0.022 -0.223 1.354 0.133 Standard Error 0.012 0.056 0.502 0.814 t-statistic (1.19) (-3.98) -2.69 -0.13 Number of Observations, n = 210; R-squared = 0.7516 Critical Students' t = 1.96 at 5% Level of Significance

Ivy, a General Manager at Mumias Sugar Company, estimated a multiplicative demand function of the form: Qa = aPªp[ª%Poª• using a cross-section data collected in the company sales on 30th June, 2016. The estimation results are as follows: Constant Price (P) Income (I) Price of Other Good (P0) Estimated coefficient 0.022 -0.223 1.354 0.133 Standard Error 0.012 0.056 0.502 0.814 t-statistic (1.19) (-3.98) -2.69 -0.13 Number of Observations, n = 210; R-squared = 0.7516 Critical Students' t = 1.96 at 5% Level of Significance

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4: Estimating Demand

Section: Chapter Questions

Problem 1.2CE: Interpret the coefficients and calculate the price elasticity of soft drink demand.

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