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Final Exam 2000

# Final Exam 2000 - Statistics for Food and Resource...

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Statistics for Food and Resource Economics Final 2000 1. One commonly estimated model of consumer demand is the differential model. In this model, share weighted logarithmic changes in consumption are regressed on logarithmic changes in income and logarithmic changes in the price for each good. Mathematically, the model can be written as: () () () it m j jt ij t i it it p D Q D q D w επ θ + + = = 1 where w it is the budget share of good i, D(q it ) is the logarithmic change in quantity ( ln(q it )-ln(q it-1 ) ), D(Q t ) is the logarithmic change in income, and D(p jt ) are the logarithmic change in the price of each good. While this analysis is usually estimated as a system, assume that you want to estimate this model for food in the United States between 1966 and 1996 (note that one year is dropped because due to differencing). The exact form of the model estimated is () ( ) ( ) ( ) ( ) ( )( ) t t t t t t t t t p D p D p D p D p D Q D q D w ε π α + + + + + + + = 5

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Final Exam 2000 - Statistics for Food and Resource...

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