# An economist is interested in examining how an individual's cigarette consumption (C) may be influenced by the

## Question:

An economist is interested in examining how an individual's cigarette consumption (C) may be influenced by the price for a pack of cigarettes (P) and the individual's annual income (I). Using data from

50 individuals, she estimates a log-log model and obtains the following regression results.

p-values = (0.0000) (0.0045) (0.3996)

a. Interpret the value of the elasticity of demand for cigarettes with respect to price.

b. At the 5% significance level, is the price elasticity of demand statistically significant?

c. Interpret the value of the income elasticity of demand for cigarettes.

d. At the 5% significance level, is the income elasticity of demand statistically significant? Is this result surprising? Explain.

## Step by Step Answer:

**Related Book For**

## Business Statistics Communicating With Numbers

**ISBN:** 9780078020551

2nd Edition

**Authors:** Sanjiv Jaggia, Alison Kelly