Question

In: Statistics and Probability

You have the following data on quantity demand of commodity X and its price and other factors during 1991-2005:-

                                                                       Assignment 1( New Version)

You have the following   data on quantity demand of commodity X and its price and other factors during 1991-2005:-

year

Quantity ( Q)

KG

Expenditures ( M)

NIS

Price of X ( Px)

NIS/KG

Price of Substitutes   (Py )

NIS/KG

1991

4.0

400

9

10

1992

4.5

500

8

14

1993

5.0

600

9

12

1994

5.5

700

8

13

1995

6.0

800

7

11

1996

7.0

900

6

15

1997

6.5

1000

6

16

1998

6.5

1100

8

17

1999

7.5

1200

5

22

2000

7.5

1300

5

19

2001

8.0

1400

5

20

2002

10.0

1500

3

23

2003

9.0

1600

4

18

2004

9.5

1700

3

24

2005

8.5

1800

4

21

Based on the above data:-

  1. Draw the relationship between Q & P?
  2. Using the OLS, estimate the demand function in linear form.
  3. Comments on the results by taking into account any prior expectations you have about demand functions.

      4) Compute the predictable value of the dependent variable & the residuals?

     5) How much the change in Px, Py and Expenditures ( M) explains the variations in Q?

       6) Interpret the empirical results of the estimated equation?

        7) Calculate demand elasticities at the mean.

        8) Construct a confidence internal at 95% of estimated own price elasticity at the

            mean   and in the year of 2005?

         10) Construct a confidence interval of the quantity demanded in the years 2005 and in

         the year 2008 when Px=7, Py=3.5 ,Expenditures =1900

Solutions

Expert Solution

orchestra answered 3 years ago
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