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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Definitions:

Direct Labor

The cost of wages, salaries, and benefits for employees directly involved in the production of goods or services.

Raw Materials Inventory

The total cost of all the materials that are used in the production of goods, not yet processed or in the production process.

Job-Order Costing

An accounting method that assigns costs to specific units or batches of production, allowing for detailed tracking of expenses.

Ending Balance

The final amount in an account at the end of a financial reporting period, after all adjustments have been made.