What is the elasticity of non-food expenditure

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Reference no: EM131426052

The following is estimate of regression of expenditure on non-food items (NFD) on total expenditure (Y), Price index of non-food (PNF) and Price index of food (PF)

Ln(NFD) = -5.125 + 1.25 LN(Y) - 0. 25 LN(PNF) -0.20 LN(PF)

a. What is the elasticity of Non-food expenditure with respect to

i. total expenditure Y

ii. Price of Non-food (PNF) and

iii. Price of food (PF)?

b. What is the minimum level of total expenditure for which NFD>0, if PNF=PF=1.0

Reference no: EM131426052

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