ou now know that demand equations can be estimated using
regression methodology. Suppose that you collect...
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Economics
ou now know that demand equations can be estimated using
regression methodology. Suppose that you collect data and run a
regression to estimate the demand equation for a particular
product. The resulting demand equation is as follows:
QD=6000-2PX-0.2I+4PY-2PZ Where: QD = quantity demanded of good X PX
= price of good X I = consumer income, in thousands PY = price of
good Y PZ = price of good Z Assume that consumer incomes are
$75,000, and the price of good Z is $80? Be careful - remember that
the income in the equation is in "thousands". Suppose that the
price of Good Y is $150. What is the price intercept and new
quantity intercept of the demand equation, and what can you
conclude about the change in the demand curve?
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