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The following questions refer to this regression equation. (Standard errors in parentheses, in that order. All variables are monthly values)
QD = 5,000 - 10 P + 1300 A + 4 Px + 2 I, (5,234) (2.29) (505) (1.75) (1.5)
R2 = 0.65
N = 120
F = 35.25
Standard error of Y estimate = 555
Q = Quantity demanded
P = Price = 5,000
A = Advertising expense = 54,000
Px = price of competitor's product = 4,000
I = average monthly income = 2,800
Calculate the elasticity for the following variables and briefly comment on whether they are elastic or inelastic.
Price elasticity
Advertising elasticity
Cross price elasticity
Income elasticity
Interpret the meaning of the R2 in this case.
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