ARE106SU09HW4

# ARE106SU09HW4 - University of California Davis Managerial...

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University of California, Davis Managerial Economic(ARE) 106, Summer 2009 Instructor: John H. Constantine Problem Set #4: Due MONDAY, August 31, 2009 Problem 1 : This problem requires the use of SHAZAM. Suppose you wish to estimate an Engel Curve for beef, that is, you wish to see how the consumption of beef responds to a change in income. read(are106/chick6.txt) Y PC PB INC set nowide sample 1 44 *PB = price of beef, cents per pound, in year t *PC = price of chicken, cents per pound, in year t *Y = per capita consumption of beef consumed, in pounds, in year t *INC = disposable income, in \$100, in year t STAT Y INC GENR LNY = LOG(Y) GENR LNINC =LOG(INC) OLS Y INC OLS LNY LNINC stop (a) Given the above SHAZAM command file, state the two PRFs to be estimated. (b) For each model, test the hypothesis that β 2 = 0. You are to test using the (i) t-test, (ii) confidence interval approach, and (iii) p-statistic. (c) For the linear model, test the hypothesis that β 2 = 0.30 versus is it not. You are to test using the (i) t-test, (ii) confidence interval approach, and (iii) p-statistic. (d) For the double-log model, test the hypothesis that β 2 = 0.5 versus is it not. You are to test using the (i) t-test, (ii) confidence interval approach, and (iii) p-statistic. (e) Suppose we are at the mean values of the data. What are the income demand elasticities in each model? (f) Suppose INC = 55. What are the (i) predicted value of Y ( Y ) and (ii) income demand elasticities in each model?

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Problem 2 : This problem requires the use of SHAZAM. read(are106/chick6.txt) Y PC PB INC set nowide sample 1 44 *PB = price of beef, cents per pound, in year t *PC = price of chicken, cents per pound, in year t *Y = per capita consumption of beef consumed, in pounds, in year t *INC = disposable income, in \$100, in year t STAT Y INC GENR LNY = LOG(Y) GENR LNINC =LOG(INC) OLS LNY INC OLS LNY INC / LOGLIN stop (a) Given the above SHAZAM command file, state the PRF to be estimated.
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## This note was uploaded on 11/19/2009 for the course ARE ARE106 taught by Professor Constantine during the Spring '09 term at UC Davis.

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ARE106SU09HW4 - University of California Davis Managerial...

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