Determine point price and income elasticity for household

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An estimate of the demand function for household furniture produced the following result F= 0.0036Y1.08R0.16P-0.48 p=0.996 where F= furniture expenditures per household. Y= disposable personal income per household. R= value of private residential construction per household. P= ratio of the furniture price index to the consumer price index. a) Determine the point price and income elasticity for household furniture. b) what interpretation would you give to the exponent for R? Why? do you suppose R was included in the equation as a variable? c)If you were a supplier to the furniture manufacturer, would you preferred to see the analysis performed in the physical sales units rather than dollars of revenue? How would this change alter the interpretation of the price coefficient, presently estimated as0.48?

Reference no: EM13213155

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