04 Jun Question Week 4 chapter 5 homework Click the link above to submit your homework.
Question
Week 4 chapter 5 homework
Click the link above to submit your homework.
Chapter 5
Question: 5.3
Problems: 5.10, 5.13, 5.14, and 5.27
Problem 5.10
Based on 11 annual observations, the following regressions were obtained:
^
Model A: Y(sub t) = 2.6911 – 0.4795X(sub t)
se = (.1216) (.1140) r^2 = .6628
^
Model B: Y(sub t) = 0.7774 – .2530 ln X(sub t)
se = (.0152) (0.0494) r^2 = 0.7448
where Y = the cups of coffee consumed per person per day and X = the price of coffee, dollars per pound.
a. interpret the slope coefficients in the two models. explain specifically.
_ _
b. you are told that Y(mean) = 2.43 and X(mean) = 1.11. At these mean values, estimate the price elasticty for model A and show work.
c. what is the price elasticity for model B? show work
d. from the estimated elasticities, can you say that the demand for coffee is price inelastic? why?
e. how would you interpret the intercept in model B? (hint take the anitlog) show work
f. “since the r^2 of model B is larger that that of model A, model B is preferable to model A.” COMMENT.
Problem 5.27
Refer to Example 4.5 (Table 4-6) about education: GDP. and population for 38. countries. a. Estimate a linear (UV) model for the data. What are the resulting equation and relevant output values (i.e.: F statistic. t values. and R2)?
b. Now attempt to estimate a log-linear model (where both of the independent variables are also in the natural log format).
c. With the log-linear model, what does the coefficient of the GDP variable indicate about education? What about the population variable?
d. Which model is more appropriate?
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