The Following Data Show the Demand for an Airline Ticket

question 26

Multiple Choice

The following data show the demand for an airline ticket dependent on the price of this ticket. For the assumed cubic and log-log regression models, Demand = β₀ + β₁Price + β₂Price² + β₃Price³ + ε and ln(Demand) = β₀ + β₁ln(Price) + ε, the following regression results are available. Which of the following does the slope of the obtained log-log regression equation ln ( ) = 26.3660 - 3.2577 ln(Price) signify?

• A) For every 1% increase in the price, the predicted demand declines by approximately 3.2577%.
• B) For every 1% increase in the demand, the expected price increases by approximately 3.2577%.
• C) For every 1% increase in the demand, the expected price decreases by approximately 3.2577%.
• D) For every 1% increase in the price, the predicted demand increases by approximately 3.2577%.

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