Question: 3. (5 points) Let's say you wanted to understand the relationship between the price of oral rehydration salts and demand for oral rehydration salts. You

3. (5 points) Let's say you wanted to understand the relationship between the price of oral rehydration salts and demand for oral rehydration salts. You collect detailed data and then run a regression and estimate the following equation relating quantity of packets of oral rehydration salts demanded by a household per month to the price per package in Kenyan Shillings (KSH) (for reference the exchange rate is approximately 100KSH:US$1) Q salt=10-0.025P_salt The standard error on the coefficient on Price is 0.012, and the average Price is 150KSH in the sample and the average Quantity is 6.25 packages per household per month. a (1) Interpret the constant. Is it meaningful? b. (2) Interpret the coefficient on Price in terms of significance, sign, and size (is it meaningful?). c (2) Calculate the price clasticity of demand. Is it inelastic or clastic? Why might this result make sense in this case

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