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    Assume that Q = quantity of pizza (in cents), X1 = price of pizza, X2 = tuition (in thousands of dollars), X3 = price of soft drinks (in cents), and X4 = location (1 for urban setting)

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    1. Assume that Q = quantity of pizza (in cents), X1 = price of pizza, X2 = tuition (in thousands of dollars), X3 = price of soft drinks (in cents), and X4 = location (1 for urban setting):

    Q X1 X2 X3 X4

    10 100 14 120 1
    12 100 16 95 1
    13 90 8 110 1
    14 95 7 90 1
    9 110 11 100 0
    8 125 5 100 0
    4 125 12 125 1
    3 150 10 150 0
    15 80 18 100 1
    12 80 12 90 1
    13 90 6 80 0
    15 100 5 75 0
    12 110 13 100 1
    10 110 10 125 0
    10 125 14 130 0
    12 110 15 80 1
    11 150 16 90 0
    12 100 12 95 1
    10 150 12 100 0
    8 160 10 90 0
    9 150 13 95 0
    10 135 15 100 1
    11 125 16 95 1
    12 100 17 100 0
    13 75 10 100 1
    10 100 12 110 1
    9 110 6 125 0
    8 125 10 90 0
    8 150 5 80 1
    5 150 10 95 0

    a. Estimate the linear demand function with Q as the dependent variable and X1 as the independent variable. Comment fully on the results and discuss the identification problem.
    b. Estimate the linear demand function with Q as the dependent variable and X1, X2, X3, and X4 as the independent variables. Comment fully on the results. Calculate the elasticity of demand when X1 = 100, X2 = 10, X3 = 90, and X4 = 1. At what value of X1 do we have unitary elasticity (assume X2 = 10, X3 = 90, and X4 = 1)?
    c. Take the natural logarithm of Q, X1, X2, and X3 (not X4) and estimate the exponential demand function (or Cobb-Douglas function). Comment fully on the results. What is the value of the price elasticity of demand? What is the value of the cross-price elasticity of demand?

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    https://brainmass.com/statistics/linear-regression/151404

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    Solution Summary

    Assume that Q = quantity of pizza (in cents), X1 = price of pizza, X2 = tuition (in thousands of dollars), X3 = price of soft drinks (in cents), and X4 = location (1 for urban setting):

    $2.19

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