Answer to Question #69430 in Macroeconomics for Michael Pendleton

Question #69430
interpreting multivariate demand
1
Expert's answer
2017-07-31T12:07:07-0400
Multivariate demand affects not only the price of this product. General view of the multivariate demand function on the example of the airline market:
Dx = D (Px, Py, Pz, B, W, A, E, T, U)
Dx , stands for demand for item x (air ticket)
Px, its own price (of the air ticket)
Py, the price of its substitutes (other airlines or even other type of transport)
Pz, the price of its complements (like taxi to the airport)
B, the income of consumer
W, the wealth of purchaser (business class or economy class)
A, the advertisement for the product
E, the price expectation of the consumer
T, taste or preferences of consumer
U, all other factors.
Multivariate demand can be used in regression analysis as multivariate regression model.
P = g + hQ + iY + e
This is an inverse demand function that incorporates both quantity (Q) and income (Y) as explanatory variables.
g, h and I are coefficients to be estimated, e is a random error.

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be the first!

Leave a comment

LATEST TUTORIALS
New on Blog
APPROVED BY CLIENTS