# Below is given a multiple regression in which the dependent variable is the quantity demanded. Q...

## Question:

Below is a multiple regression in which the dependent variable is the quantity demanded. {eq}Qx {/eq}, of movie tickets at the theater, and the independent variables are, {eq}Px {/eq} is the movie ticket price in dollars {eq}Py {/eq} is the price of a redbox {eq}DVD {/eq} rental in dollars, {eq}I {/eq} is income in dollars, and {eq}ADV {/eq} is advertising expenditures in dollars.

{eq}Qx=11,600-5,000Px+3,500Py+35I+1,000ADV {/eq}

The regression was estimated for 62 movie outlets.

When {eq}Px = $6, Py = $2, I = $40, {/eq} and {eq}ADV = $20 {/eq}, the point price elasticity of demand equals:

a) -3.0

b) -0.3333

c) -1.00

d) -0.5033

Regression summary output

**Regression statisitc**

R square | 0.5557 |

Adjusted R square | 0.5329 |

Standard error | 7211.848 |

Observation | 62 |

F | Significance F |

24.395 | 0.000 |

Coefficient | Standard error | |

Intercept | 6,600 | 5050.9 |

Px | -5,000 | 1,001.5 |

Py | 3,500 | 1,750 |

I | 35 | 19.5 |

ADV | 1,000 | 333 |

## Price Elasticity of Demand:

Price elasticity of demand measures the responsiveness of the quantity demanded to changes in price. The point price elasticity of demand is the price elasticity of demand at a particular point on the demand curve.

## Answer and Explanation: 1

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The point price elasticity of demand equals **a) -3.0 **

Plug all the above information to calculate the quantity demanded when price of movie ticket...

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Chapter 3 / Lesson 54Learn what price elasticity is. Discover how to find price elasticity of demand, study examples of price elasticity, and examine a price elasticity graph.

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