Question: Consider the following estimated demand function for coee: The regression equation is lndQt = 1 : 3 0 : 5 ln Pt + 0 :
Consider the following estimated demand function for coee: The regression equation is lndQt :: ln Pt : ln It : ln P t :Dt :Dt :Dt ln It :Dt ln It :Dt ln Pt :Dt ln Pt :Dt ln P t :Dt ln P t Predictor Coef Stdev Constant :: ln P :: ln I :: ln P :: D:: R: D:: N D ln I :: D ln I :: D ln P :: D ln P :: D ln P :: D ln P :: where Q pounds of coee consumed per capita P relative price of coee per pound at prices I per capita personal disposable income, in thousands of dollars P relative price of sugar per quarter pound at prices D for Europe D for North America ln natural logarithm a Interpret the estimated coecients of ln P ln I, and ln P b Test whether the demand for coee is price inelastic? c Test whether coee and sugar are complementary products? d Test whether the demand for coee is income elastic? e Interpret the estimated coecients of all the dummies i
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