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 =1:30:5 ln Pt +0:4 ln It 0:24 ln P 0 t 0:3D1t +0:7D2t +0:1D1t ln It 0:05D2t ln It +0:2D1t ln Pt +0:3D2t ln Pt 0:2D1t ln P 0 t 0:1D2t ln P 0 t Predictor Coef Stdev Constant 1:30:4 ln P 0:50:07 ln I 0:40:42 ln P 00:240:43 D10:30:03 R2=0:84 D20:70:03 N =132 D1 ln I 0:10:04 D2 ln I 0:050:35 D1 ln P 0:20:45 D2 ln P 0:30:55 D1 ln P 00:20:9 D2 ln P 00:10:87 where Q = pounds of coee consumed per capita P = relative price of coee per pound at 1990 prices I = per capita personal disposable income, in thousands of 1990 dollars P 0= relative price of sugar per quarter pound at 1990 prices D1=1 for Europe D2=1 for North America ln = natural logarithm (a) Interpret the estimated coecients of ln P, ln I, and ln P 0?(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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