Suppose someone has presented the following regression results for your consideration: t = 2.6911 - 0.4795Xi where

Question:

Suppose someone has presented the following regression results for your consideration:
Ŷt = 2.6911 - 0.4795Xi
where Y = coffee consumption in the United States (cups per person per day) X = retail price of coffee ($ per pound) f = time period
a. Is this a time series regression or a cross-sectional regression?
b. Sketch the regression line.
c. What is the interpretation of the intercept in this example? Does it make economic sense?
d. How would you interpret the slope coefficient?
e. Is it possible to tell what the true PRF is in this example?
f. The price elasticity of demand is defined as the percentage change in the quantity demanded for a percentage change in the price. Mathematically, it is expressed as
Elasticity = Slope (X / Y)
That is, elasticity is equal to the product of the slope and the ratio of X to Y, where X = the price and Y = the quantity. From the regression results presented earlier, can you tell what the price elasticity of demand for coffee is? If not, what additional information would you need to compute the price elasticity?