- 6 Exercise 4 6 The Demand For Haddock Has Been Estimated As Log Q A B Log P C Log 1 D Log Pm Log Q A B Log P C Log 1 (69.21 KiB) Viewed 13 times
6. Exercise 4.6 The demand for haddock has been estimated as: log(Q)=a+b log(P)+c log(1)+d log(Pm)log Q=a+b log P+c log I+d log Pm where QQ = quantity of haddock sold in New England PP price per pound of haddock. II = a measure of personal income in the New England region PmPm= an index of the price of meat Suppose b=-1.559b--1.559, c-0.567c-0.567, and d=1.706d=1.706. What is the price elasticity of demand? O O 1.706 -1.559 O -2.750 What is the income elasticity of demand? 0.567 -1.559 1.706 0.332 0.567 What is the cross price elasticity of demand? 0.567 3.009 1.706 -1.559 According to the estimated model, the demand for haddock is Suppose disposable income is expected to increase by 5 percent next year. Assuming all other factors remain constant, the quantity of haddock demanded next year will by with respect to price. percent.