Which of the Following Regressions Would Yield a Coefficient Estimate

question 28

Multiple Choice

Which of the following regressions would yield a coefficient estimate that would be directly interpreted as the price elasticity of demand?

• A) Quantity_i = α₀ + α₁log(Price_i)
• B) log(Quantity_i) = α₀ + α₁log(Price_i)
• C) Quantity_i = α₀ + α₁Price_i
• D) Quantity_i = α₀ - α₁log(Price_i)

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Definitions:

Buyer's Expense

Buyer's expense refers to costs that the purchaser of goods or services is required to pay, outside of the purchase price, such as shipping or taxes.

Conditional Contracts

Agreements that become enforceable only upon the occurrence of specified conditions.

Sale-On-Approval Contracts

Contracts that allow buyers to take possession of goods before deciding whether to complete the purchase, often used in sales where inspection is necessary.

Condition-Or-Sale Contracts

Agreements that stipulate the sale of goods is dependent on certain conditions being met, often used to protect the interests of the seller.