Question

You work for a firm producing fitness equipment. You have been told that the demand curve for the firm’s main product—a multistation home gym—is linear. You have been provided with price and quantity data obtained from focus groups and have been asked to run a regression of revenue on price. Should you use a linear functional form—with revenue as a linear function of price—or something else? Explain.



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  • CreatedNovember 13, 2014
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