101 Class 14 W2008

# 101 class 14 w2008

• Notes
• 24

This preview shows page 1. Sign up to view the full content.

This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Principles of Economics I Economics 101 Announcements Readings: Discussion Sections this week CTools notes Chapter 6 Passover New assignment available Quiz in section this week Runs through the exam period (therefore conflicts with the final for this course) Please contact me SOON if Passover obligations will prevent you from sitting the final at the predetermined time Ordinary Least Squares If the real (but unknown) demand function has the form: Qd = a + b1 P + b2 x2 + ...+ bn xn + Estimate demand using: ^ ^ ^ ^ ^ Q d = a + b1 P + b2 x 2 + + bn x n where parameters are chosen to minimize the sum of all squared residuals. Ordinary Least Squares To calculate residuals: For each observation of demand, we know: Qd i.e. the dependent variable; and P, x2..., xn i.e. the independent variables Evaluate the estimated function using the observed values of the independent variables: ^ ^ ^ ^ ^ Q d = a + b1 P + b2 x 2 + + bn x n Find the difference between the observed and estimated quantities demanded, using the same independent variable values: ^ ^ ^ ^ e = Q d - [a + b1 P + b2 x 2 + + bn x n ] OLS an example Real (but unknown) demand fn: Qdi = a + b Pi + i Three observations: 1) 2) 3) (Qd1, P1) = (1, 6) (Qd2, P2) = (8, 4) (Qd3, P3) = (3, 6) P OLS an example e = 1 3 6 Slope = 1/3 2 e = 2 e1 = 1 Qd =...
View Full Document

• Spring '08
• Gerson

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern