Econ107HW2(1)

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Unformatted text preview: n.No, since the amount of hours you don’t sleep is just 18/120 = 15% of the additional times you work. C5. For the population of firms in the chemical industry, let rd denote annual expenditures on research and development, and let sales denote annual sales (both are in millions of dollars). (i) Write down a model (not an estimated equation) that implies a constant elasticity between rd and sales. Which parameter is the elasticity? Δrd () r Δ ­ %%sarlds = cte. = Δsades = ΔlΔlgo(garlds ) → log(rd) = β0 + β1log(sales) l Δe ose sales (ii) Now, estimate the model using the data in RDCHEM.RAW. Write out the estimated equation in the usual form. What is the estimated elasticity of rd with respect to sales? Explain in words what this elasticity means. ︿ ︿ ­ log(rd) = − 4.10 + 1.08log(sales) if sales increase by 1% then rd increases by 1.08% C7. Use the data in CHARITY.RAW [obtained from Franses and Paap (2001)] to answer the following questions: (i) What is the average gift in the sample of 4,268 people (in Dutch guilders)? What percentage of people gave no gift?...
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This document was uploaded on 02/04/2014.

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