Demand Estimation
ECO 550 Assignment 1: Demand Estimation Option #1 Compute all elasticities for each independent variable. Quantity Demanded= (-5200)-42(500)+20(600)+5.2(5,500)+.20(10,000)+.25(5,000) =(-5200)-21000+12000+28600+2000+1250=17650 =17650 Cross Price Elasticity =20, Px=600, QD= 17650 =20(600/17650) =0.68, means there are substitute products Income Elasticity 5.2, I=5500, QD=17650 =5.2(5500/17650) =1.62 Advertisement Elasticity 0.20, A= 10,000, QD= 17650 0.20(10000/17650) 0.11 Supply Elasticity 0.25, M=5000, QD= […]