Question

Given the OLS estimates for the coefficients and intercept in the basic tier cable demand equation (3), calculate the following:
a. Income elasticity of demand for basic service evaluated at the average values for monthly per capita income and the number of basic subscribers across the sample of ten systems. Based on your calculation, is basic cable a normal or an inferior good?
b. Cross-price elasticity of demand for basic service with respect to the pay tier price evaluated at the average values for the pay tier price and the number of basic subscribers across the ten systems in the sample. Based on your calculation, is pay tier service a substitute or a complement for basic service?
c. The income elasticity of demand for basic service evaluated at the income and quantity data for system number 3.



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  • CreatedNovember 14, 2014
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