Download Rough calculation of elasticity:

Rough calculation of elasticity:
1. An adult animal is always roughly the same size and weight. The same is true for a
juvenile animal. An adult animal is always bigger and heavier than a juvenile.
2. At a given point in time the price per pound is the same for both genders and for adult or
juvenile. There has been an increase in price over time.
3. The elasticities reported in the tables below were computed
as  
Q P (Q A , g  Q J , g ) Pt

where t is time, a = A(dult), J(uvenile) and g=Male,
P Q ( Pt  Pt 1 )Q a , g
female. The numerator is the difference in the cost of an adult and the cost of a juvenile
at the beginning of the series. The denominator is the difference in the cost between the
beginning and the end of the series of an animal of a given age.
Atherurus africanus
Male
Period t
Period t+1
Elasticity
Juvenile
3214
6786
-.78
Female
Adult
6000
9875
-.72
Juvenile
2929
6056
-.92
Adult
5813
9800
-.72
Mandrillus Leucophylaeus
Male
Period t
Period t+1
Elasticity
Juvenile
6300
18000
-.64
Female
Adult
13833
21875
-.94
Juvenile
7333
18000
-.51
Adult
12750
25333
-.43
4. The data can be aggregated to the level of the market day and the elasticity estimated from the
regression: (CA, g, t 1  CJ , g, t 1 )  (Ca , g, t  Ca , g, t 1 )  u t 1 . The result is in the following
table. The results are pooled on both genders and smoked. Doing it for only a positive price
change, only a negative price change, and no price change in adult carcass between time periods
produces comparable results. The elasticity for just males is a touch higher and the elasticity for
just females is 25% smaller.
SUMMARY OUTPUT
Residuals
X Var
Regression Statistics
Multiple R 0.414311
R Square 0.171654
Adjusted R Square
0.168144
Standard Error
1445.443
Observations
238
ANOVA
df
Regression
Residual
Total
SS
MS
F
Significance F
1 1.02E+08 1.02E+08 48.90501 2.74E-11
236 4.93E+08 2089306
237 5.95E+08
Coefficients
Standard Error t Stat
P-value Lower 95%Upper 95%Lower 95.0%
Upper 95.0%
Intercept 5374.679 93.91314 57.23032 2.3E-140 5189.664 5559.695 5189.664 5559.695
X Variable 10.468921 0.067054 6.993211 2.74E-11 0.336821 0.601021 0.336821 0.601021
In principle the intercept should be zero, but here it is not. Also, the residual plots show that the
error term is not normally distributed; it has very thick tails.
In any case the elasticity of demand is estimated to be 0.46 for C. Satanas.
5.
The C. Satanas data was aggregated so that the unit of observation was the day, by gender
and age. The data file shows the number of female adult C. Satanas and their average price
on a given day. A plot of the data is below.
-10000
-50
15000
5000
Price
25000
Market for C. Satanas
1
2
3
4
5
6
7
Quantity
From the daily data the 4th and the 99th percentile regressions were fit. These lines are the lines
in the above figure. It is asserted that these lines are the market supply and demand curves. The
QR regression equations
Supply: P = 3071.5 + 928.5 Q
Demand: P = 30976.167 – 2976.167 Q
were solved for the equilibrium price and quantity: P* = 9707.017 and Q* = 7.146 .
The point elasticity of demand at the equilibrium is 0.456.