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If income declines by 2.85%, how much do I have to cut value in order to maintain existing customers?
It starts with being given a regression analysis that has the following: coefficient of the intercept is .45, the coefficient of the natural logarithm of price is -2.14, and the natural logarithm of income is .90. Based on the t-stat, p-value etc. I am reasonably confident that the true coefficients are different from zero. Also I come up with the equation of:
ln customers = .45 -2.14 ln(Price) + .90 ln(income)
However I am not sure once I get to this point.I understand that the coefficients are elasticities but then what?
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