The elasticity of demand for gasoline has been estimated to be 2.0,and the standard error is 1.0.The upper and lower bounds on the 95 percent confidence interval for the elasticity of demand for gasoline are:
A) 3 and 2.
B) 2 and 1.
C) 3 and 1.
D) None of the preceding statements is correct.

Question

Quizplus · Accepted Answer

The 95% confidence interval is calculated using the formula: estimate ± (critical value * standard error). For a 95% confidence level, the critical value is approximately 1.96. Therefore, the confidence interval for the elasticity of demand for gasoline would be 2.0 ± (1.96 * 1.0), which equals 0.04 to 3.96, not matching any of the provided options.

The Elasticity of Demand for Gasoline Has Been Estimated to Be