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Ln Q = XXXXXXXXXXln P XXXXXXXXXXln I Where Q denotes passengers in thousands per year, P the (average) ticket price, and I US national income. Determine the price elasticity, and income elasticity of...

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Ln Q = XXXXXXXXXXln P XXXXXXXXXXln I

Where Q denotes passengers in thousands per year, P the (average) ticket price, and I US national income.

Determine the price elasticity, and income elasticity of demand

Answered Same Day Dec 23, 2021

Solution

Robert answered on Dec 23 2021
120 Votes
The demand function is given as:
Ln Q = 2.737 - 1.247 ln P + 1.905 ln I
We can see that the demand function is in log form. Therefore, the coefficient of the price term
(along with the sign) will denote the price elasticity, while that of income will denote the income
elasticity of demand....
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