I also calculated the elasticity of relative price, real income (per capita) and quantity of the good (per capita). The way of calculation is explained as below:
The formula of elasticity is: b*x/y, x and y are the mean of variable, b is the coefficient of the variable. If the elasticity of relative price is greater than 1, it will be elasticity. If the elasticity of real income is greater than 1, it will be elasticity.
Question 3 is a non-linear equation, in order to convert it into linear equation, I took the nature log on both side of this equation. I used two tail test to test b1, I accept H0, b1 is possible to be1, while I used one tailed test to test b2, and I accept H1, reject H0, b2 is less than 1.The one tailed test to test b3 tell us that H0 is accepted, b3 is not different from zero.…
