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n estimate of the demand function for household furniture produced the following results f = 0.0036y1.08r0.16p-0.48 r2=0.996 Where F = furniture expenditures per household Y= disposable personal income per household R = value of private residential construction per household and P = ratio of the furniture price index to the consumer price index
a. Determine the point price and income elasticities for household fruniture
b. What interpretation would you give to the exponent for R? Why do you suppose R was included in the equation as a variable?
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