Take a look at the data output of a linear regression where the quantity of rib eye steaks sold is modeled as a function of its price, the price of chicken, disposable income, and a time trend. Using this data, what is the price elasticity of rib eye steaks?

4.

Question 4

Take a look at the data output of a linear regression where the quantity of rib eye steaks sold is modeled as a function of its price, the price of chicken, disposable income, and a time trend. Using this data, what is the price elasticity of rib eye steaks?

Regression Statistics

Multiple R

0.691

R Square

0.478

Adjusted R Square

0.436

Standard Error

32.26

Observations

55

df

SS

MS

F

Signif. F

Regression

4

47,555.91

11,888.98

11.42

0.00

Residual

50

52,034.89

1,040.70

Total

54

99,590.80

Coeff

Std Err

t Stat

P-value

Intercept

886.57

371.19

2.39

0.02

Rib Eye Price

-36.90

6.38

-5.78

0.00

Chicken Price

103.31

70.19

1.47

0.15

Disc. Income

-0.08

0.04

-2.32

0.02

Trend

3.78

1.10

3.46

0.00

Data Set Means

Mean Quantity Rib Eye

122

Mean Rib Eye Price

$7.62

Mean Chicken Price

$1.70

Mean Disposable Income

$9,253

1 / 1 point

55.32

-2.31

-0.51

This price elasticity was calculated correctly by using the slope of the regression for change in quantity/change in price and multiplying it by the mean price divided by the mean quantity.