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Problem Set Three - Problem Set 3 ECON 262 Due April 6 2010...

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Problem Set # 3 ECON 262 Due April 6, 2010 Note: ONLY hard copies accepted. Make sure that your work is neat and organized. Put the answer to each question on the indicated page. I will mark down significantly for messy and/or disorganized work or if people turn in copies of the data, residuals, or anything else I do not request. You must show your work for any credit for the F tests. 1. a. Open the worksheet “data for question 1.” The dataset contains information on demand for nitrogen fertilizer in tons and the price per ton of fertilizer from 1960 to 2007. Create a model that allows you to estimate the price elasticity of demand for nitrogen fertilizer and the annual growth rate, over time, of quantity demanded. What is the price elasticity of demand? What is the average annual growth rate of fertilizer demand? Turn in the model output on page 1. b. Using the best model, forecast the quantity demanded in 2008 if the price is $300. Turn in the full calculation including the formula on page 1 .
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