on per capita income, the price of gasoline, all other prices and a time
trend. Report all the results. Do the signs of the estimates agree with
your expectations?
(b) estimate the own price elasticity of demand, the income elasticity, and
the cross price elasticity with respect to changes in the price of public
transportation. Do the computations at the 2004 point in the data.
Income elasticity =
(% quantity demanded/% income)*( income/quantity demanded)
= .0000375*( 27113/-11.9768)
=-0.085
= .0019642 * (209.1/-11.9768)
=-0.034.
note: this is the result of the elasticity from using the log x form into the
equation. Even if I use x, the answers are so extreme like -6 and stuff
like that.
note: it says in the text book that when the regression is in log to log
form, the coefficients are the direct elasticity of dependent variable
with respect to x. Since it’s already a direct elasticity, do I still need to
multiply the coefficient with the price/quantity demanded or with
income/quantity demanded and such to find the elasticity?