FPA - Econ 444 Elementary Econometrics Fall 2007 ANSWERS TO...

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Unformatted text preview: Econ 444 Elementary Econometrics Fall 2007 ANSWERS TO SAMPLE PROBLEMS for CHAPTERS 6,7,8, AND 10 1. (a) Because economic theory suggests that the demand for food falls when the price of food rises, we expect 1 < 0. Hence the alternative hypothesis H A : 1 < 0 is appropriate. (b) At the 5% level, the critical value is 1.753 for d.f.= 18- 3 = 15. (b-1) t =- 1 . 5 / . 5 =- 3. Hence we reject the null hypothesis. (b-2) t =- 1 . 5 / . 9 =- 1 . 667. Hence we do not reject it. (b-3) t =- 1 . 5 / 1 . 2 =- 1 . 25. Hence we do not reject it. (b-4) The point estimate of 1 is positive, hence we do not reject it. (b-5) The point estimate of 1 is positive, hence we do not reject it. (b-6) The point estimate of 1 is positive, hence we do not reject it. (c) We have elastic demand when 1 <- 1. Hence H A : 1 <- 1 is appropriate. (d) At the 5% level, the critical value is 1.753 for d.f. = 18- 3 = 15. (d-1) t = [- 2 . 1- (- 1)] / . 5 =- 2 . 2. Hence we reject the null hypothesis. (d-2) t = [- 2 . 1- (- 1)] / . 9 =- 1 . 345. Hence we do not reject it....
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FPA - Econ 444 Elementary Econometrics Fall 2007 ANSWERS TO...

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