# Elasticity Case and Questions: National consumption of chicken

There are 3 attached files.

One is the case with actual deliverables highlighted in yellow. One is the spreadsheet with necessary data. The last is a document with examples of how the tables are to be done. The numbers on the table example sheet are not right, they are just there to show how the outcome should look.

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#### Solution Preview

Please see the attached files.

The calculations are provided in the excel file.

Question I

Table 1

Regression Results

Variable Model 1 Model 2 Model 3 Model 4

Intercept 39.1373*

(18.8988) 39.0350*

(18.9692) 39.4976*

(18.0723) 39.7745*

(19.0077)

Price of Chicken -0.1770*

(3.9920) -0.1223

(1.9412) -0.1347

(2.0367) -0.1556*

(3.3572)

Per Capita Disposable Income 0.0022*

(20.4011) 0.0023*

(18.6920) 0.0023*

(18.2546) 0.0023*

(19.0954)

Retail Price of Pork -0.0287

(1.2153) -0.0197

(0.7229)

Retail Price of Beef -0.0059

(0.6757)

Combined price of substitutes -0.0161

(1.3934)

F Statistic 1798.9830*

1217.1448*

897.4686*

1234.1878*

R2 0.9909

0.9913

0.9914

0.9914

Adjusted R2 0.9904

0.9905

0.9903

0.9906

Note1: Numbers in parentheses below the parameter estimates are absolute values of t-ratios.

Note 2: * Denotes significant at 1% level

Regression Models

Model 1:

Model 2:

Model 3:

Model 4:

Where Per Capita consumption of chicken (lbs)

= Real retail price of chicken per lb (cents)

= Real disposable income per capita ($)

= Real retail price of pork per lb (cents)

= Real retail price of beef per lb (cents)

= Real retail price of chicken substitutes per lb (cents)

Question II

Elasticity Calculation

The elasticity of demand are calculated by using the following formula

1. Own Price Elasticity

Where = Regression coefficient corresponding to price

= Mean Price of chicken

= Quantity estimated by using the regression equation corresponding to the average price

2. Income Elasticity

Where = Regression coefficient corresponding to income

= Mean per capita disposable income

= Quantity estimated by using the regression equation corresponding to

3. Cross - Price Elasticity with Pork

Where = Regression coefficient corresponding to price of pork

= Mean Price of pork

= Quantity estimated by using the regression equation corresponding to

4. Cross - Price Elasticity with Beef

Where = Regression coefficient corresponding to price of beef

= Mean Price of beef

= Quantity estimated by ...

#### Solution Summary

National consumption of chickens are examined.