Empirical Exercise 7: Demand for cars. Load the dataset PS_cars. We will be conducting analysis on this dataset across several problem sets to be...
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Question: What STATA command would be used for each part?

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. Empirical Exercise 7: Demand for cars.
Load the dataset PS_cars. dia. We will be conducting analysis on this dataset across several
problem sets to be able to see how different estimation methods compare to each other. This
exercise will also expose you to other realities of doing econometrics, namely, finding and
combining data and will test programming skills.
1. Answer the following questions and put the results in a simple table. Explain briefly
what Stata commands you used to calculate these numbers. Prefix "bysort" will be
helpful when answering these questions,
(a) What are the mean prices for cars in each year?
(b) What is the average price for cars that have AC as standard (given by "ac_standard" )
in each year?
(c) What is the cumulative market share of cars with above average price?
(d) What are the market shares of firms in each year? Firms are identified by different
values of the "firmid" variable.
2. Suppose that the prices are given in nominal dollar values and not real dollar values
(ie. not adjusted for inflation). You want to have all prices in the equivalent of 1990
dollars. You can do so in a few steps:
(a) Find the Consumer Price Index (CPI) for years 1970-1990 (you can use any Internet
resource);
(b) Weight the prices in years 1970-1990 by CPI to get their values in dollars of year
1990. To do so you will need to input the CPI data into Stata and combine it
with PS_cars.dta. Command "merge" is particularly helpful when combining the
dataseta.
Explain briefly what Stata commands you used.
3. You are interested in predicting a car's market share based on its attributes and price.
What regression would you run? Specify it, run it and report the results.

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