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The demand function for JZ bicycles in Super City has been estimated to be Q 4000 11P 30I Below is additional information concerning this Regression Standard Error SE of the Intercept

The demand function for JZ bicycles in Super City has been estimated to be: Q = 4,000 - 11P + 30I Below is additional information concerning this Regression: Standard Error (SE) of the Intercept coefficient = 700 Standard Error (SE) of the price coefficient = 0.64 Standard Error (SE) of the Income coefficient = 1.40, R-Square = 0.64, Adjusted R-Square = 0.61, F-Statistic = 31.402, Q is quantity demanded of JZ bicycles per year, P is the price of JZ bicycles in dollars, and I is annual income in thousands of dollars. A. Which of the two independent variables (if any) appears to be statistically significant (at the 5% level) in explaining bicycle sales? B. What proportion of the variation in JZ bicycle sales is explained by the regression equation? C. Give an economic interpretation of each estimated regression coefficient, i.e., P and I. D. When P = $300 and I = 30 (use 30 and not 30,000 in the calculations), calculate the following and characterize the demand for JZ bicycles (i.e., elastic, inelastic or unitary elastic) and whether JZ bicycles is an inferior, normal and basic, or normal and luxury: - The point Price Elasticity of Demand. - The Income elasticity of demand.

May 15 2020 View more View Less

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