Exhibit 16

question 49

Multiple Choice

Exhibit 16.5.The following data shows 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: Refer to Exhibit 16.5.Using the log-log model,what is the predicted demand when the price is $200?

• A)10874.92
• B)9201.45
• C)7849.25
• D)12499.98

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Definitions:

Goods and Services

The tangible and intangible items that satisfy human wants and needs, which are produced and consumed by individuals and businesses.

Consumption Expenditures

The total amount spent by households on goods and services for personal use.

Government Expenditures

The total amount spent by the government, including spending on goods, services, and public works, and transfer payments.

GDP Components

The parts that make up Gross Domestic Product, generally categorized as consumption, investment, government spending, and net exports.