Use the following model to answer questions in this section (Note: Coefficient values are in percentage terms)
Quant. Demanded of Starbucks Coffee in the market = 5.83
+ 1.30 (Price of Starbucks Coffee)
+ 0.75 (Average income in geography)
+ .50 (Price of McDonalds Coffee)
- .43 (Price of dairy creamer)
+ .003 (Price of local coffee shop)
- 1.20 (Age)
Assume that our model is a complete model of the factors affecting Qd.
1. Are you able to interpret elasticities directly from this model? Explain why or why not. Given this, how do you interpret the "Age" variable?
2. Interpret the coefficient of the price of Starbucks Coffee. What is it saying literally? Does this interpretation make sense? Why or why not?
3. What are the independent variable(s) and dependent variable(s) in this model? (You can label them on the equation).