Build-Right Concrete Products produces specialty cement used in construction of highways. Build-Right is a price-setting firm...

  

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Build-Right Concrete Products produces specialty cement used in construction of highways. Build-Right is a price-setting firm and estimates the demand for its cement by the State Highway Department using a demand function in the nonlinear form: Q = ap M°P% where Q= yards of cement demanded monthly, P= the price of Build-Right's cement per yard, M= state tax revenues per capita, and PR = the price of asphalt per yard. The manager at Build-Right transforms the nonlinear relation into a linear relation for estimation. The estimation results are presented below: DEPENDENT LNQ R-SQUARE F-RATIO P-VALUE ON F VARIABLE: OE ERVA ONS 34 0.678 14.323 0.02311 PARAMETER STANDARD T- P- VARIABLE ESTIMATE ERROR RATIO VALUE INTERCEPT 4.00 1.50 2.67 0.0122 LNP -0.800 0.25 -3.20 0.0032 LNM 0.750828 0.1816 4.13 0.0003 LNPR 0.600 0.200 3.00 0.0054 6) Given the above, the estimated demand for cement Is a. elastic because E= -4.0. b. elastic because É= -2.0. c. elastic because E= -15. d. inelastic because E= -0.32. e. inelastic because Ê= -0.8. 7) Given the above, at the 1 percent level of signlficance, the number of degrees of freedom for a t-test Is and the critical value of the t-statistlc Is --- Only parameter estimate(s) ---. Is (are) NOT statlstically signlficant at the 1 percent level of significance. a. 30; 2.457; a b. 30; 2.750; a C. 34; 2.042; e d. 34; 2042, à ande 8) Given the above, If tax revenue per capita (M) Increases 5%, the estimated quantity of cement demanded will a. increase by less than 1%. b. increase more than 1% but less than 5%. c. increase more than 5% but less than 10%. d. increase more than 10%. 9) Given the above, the estimated cross-price elastlelty of demand for cement relative to the price of asphalt Is а. О.3 b. 0.6 C. 1.2 d. 3.0 e. none of the above 10) Given the above, If the price of asphalt (PR) decreases 20%, the estimated quantity of cement demanded will: a. increase 12% b. increase 6% c. increase 1.2% d. decrease 12%. e. decrease 1.2%. Build-Right Concrete Products produces specialty cement used in construction of highways. Build-Right is a price-setting firm and estimates the demand for its cement by the State Highway Department using a demand function in the nonlinear form: Q = ap M°P% where Q= yards of cement demanded monthly, P= the price of Build-Right's cement per yard, M= state tax revenues per capita, and PR = the price of asphalt per yard. The manager at Build-Right transforms the nonlinear relation into a linear relation for estimation. The estimation results are presented below: DEPENDENT LNQ R-SQUARE F-RATIO P-VALUE ON F VARIABLE: OE ERVA ONS 34 0.678 14.323 0.02311 PARAMETER STANDARD T- P- VARIABLE ESTIMATE ERROR RATIO VALUE INTERCEPT 4.00 1.50 2.67 0.0122 LNP -0.800 0.25 -3.20 0.0032 LNM 0.750828 0.1816 4.13 0.0003 LNPR 0.600 0.200 3.00 0.0054 6) Given the above, the estimated demand for cement Is a. elastic because E= -4.0. b. elastic because É= -2.0. c. elastic because E= -15. d. inelastic because E= -0.32. e. inelastic because Ê= -0.8. 7) Given the above, at the 1 percent level of signlficance, the number of degrees of freedom for a t-test Is and the critical value of the t-statistlc Is --- Only parameter estimate(s) ---. Is (are) NOT statlstically signlficant at the 1 percent level of significance. a. 30; 2.457; a b. 30; 2.750; a C. 34; 2.042; e d. 34; 2042, à ande 8) Given the above, If tax revenue per capita (M) Increases 5%, the estimated quantity of cement demanded will a. increase by less than 1%. b. increase more than 1% but less than 5%. c. increase more than 5% but less than 10%. d. increase more than 10%. 9) Given the above, the estimated cross-price elastlelty of demand for cement relative to the price of asphalt Is а. О.3 b. 0.6 C. 1.2 d. 3.0 e. none of the above 10) Given the above, If the price of asphalt (PR) decreases 20%, the estimated quantity of cement demanded will: a. increase 12% b. increase 6% c. increase 1.2% d. decrease 12%. e. decrease 1.2%.

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ANSWER 6 elasticity of demand is given by the coeff of lnQ wrt lnP ep 08 Because absolute ep 1 This ... View the full answer