The following regression cquations are from the study of the demand for chicken

Question

The following regression cquations are from the study of the demand for chicken in the United States for the time period 1960-1982. The estimated is given below (t-statistics in parenthesis): 2. = 37.24 + .0050 (%) _ .61040) + .1977 * OG) + .0693"(%) (9.99) (1.031) .742) (3321) .357) R-9424 n=34, k-5 Y Per Capita Consumption of Chickens in pounds X Real Disposable Income per capita in dollars = Real Retail Price of Chicken per pound in cents Xj- Real Retail Price of Pork per pound in cents X4-Real Retail Price of Beef per pound in cents a. Using this equation suppose you are given the following values of your 23.5;Xi= 142.9. Forecast independent/explanatory variables: X 165.9; X. 58.3. X-1 the value of chicken consumption given the specified values of each X. b. Calculate the point price elasticity of demand for chicken given the values in part b. Note: Ep= Price Elasticity of Demand %AP AP Q Interpret the elasticity coefficient in part b. If income increases by 75.5 ceteris paribus what would be the expected change in chicken consumption. Explain. c. d.

Explanation / Answer

c)

with a unit increase in real retail prce of chicken per pound in cents there is .6104 units increase in per capita consumption of chicken in pounds

d)

with a unit increase in incomes there is .005 units increase in per capita consumption of chicken in pounds

with 75.5 units increase in income, there is .3775 units increase in per capita consumption of chicken in pounds.

a) =37.24+0.005*1165.9+0.6104*58.3+0.1977*123.5+0.0693*142.9 112.97474

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