Researchers estimated the demand function for beer. The estimated equation is: In Beer = 7.28-0.980ln Pr +0.065ln PrCider - 0.040ln PrWine +0.074Income + e where In Beer is the natural log of beer consumed (in millilitres), In Pr denotes the natural log of the price of beer, In PrCider is the natural log of cider price, InPrWine is the natural log of wine price, and Income denotes income in thousands £s. (a) What is the change in beer demand when the price of beer increases by 1 percent? (b) What is the change in beer demand when the price of cider falls by 20 percent? (c) What is the change in beer demand when the income increases by 2.5 percent, when the income equals £40,000?

Researchers estimated the demand function for beer. The estimated equation is: In Beer = 7.28-0.980ln Pr +0.065ln PrCider - 0.040ln PrWine +0.074Income + e where In Beer is the natural log of beer consumed (in millilitres), In Pr denotes the natural log of the price of beer, In PrCider is the natural log of cider price, InPrWine is the natural log of wine price, and Income denotes income in thousands £s. (a) What is the change in beer demand when the price of beer increases by 1 percent? (b) What is the change in beer demand when the price of cider falls by 20 percent? (c) What is the change in beer demand when the income increases by 2.5 percent, when the income equals £40,000?

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter1: Introducing The Economic Way Of Thinking

Section1.A: Applying Graphs To Economics

Problem 2SQP

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