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Unformatted text preview: + 0.536*TREND -7.503*RPcoke+0.073*RPjuice+0.765*RINCOME. Interpret the coefficient for TREND. 2. Price Trend. We observe that (i) children of the baby boomers are graduating from high school in record numbers, and (ii) U.S. college tuition has been trending upward. Use a diagram to illustrate how (i) contributes to (ii). Briefly explain. 3. The following Cobweb model was estimated for the juice market: Q t s = P t-1 Q t d = 23 - 0.8P t P o = 15 a) Calculate equilibrium price and quantity at time 1 (i.e., t = 1). b) Calculate equilibrium price and quantity at time 2. c) Calculate equilibrium price and quantity at time 3. d) Carefully graph the Cobweb model. Include arrows to indicate direction of causality. e) What happens to equilibrium price and quantity over time? Why?...
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- Fall '07