Economist is confortable using parameter estimates

Reference no: EM131236728

An MBA student has proposed the following demand equation for good Y. QdY = a + b PY + c M

where: QdY = quantity demanded of good Y in millions of tons per year PY = Price of good Y in dollars per ton M = Average consumer income in thousands of dollars

What sign should this student expect a, b, and c to have? Explain.

The regression output from the computer is as follows:

Dependent Variable:

QdY R-Square F-ratio p-value on F

Observations: 90 .4 12.84 0.015

Variable Parameter Estimate Standard Error T-ratio P-Value

Intercept 60.00 5468.32 3.12 0.0082

PY -1.00 0.65 -1.27 0.2145

M 0.02 3.29 5 .12 0.0121

This economist is confortable using parameter estimates that are statistically significant at the 10 percent level or better.

Does PY have a statistically significant effect on the quantity demanded of good Y? Explain, using the appropriate p-value.

Does M have a statistically significant effect on the quantity demanded of good Y? Explain, using the appropriate p-value.

What fraction of the total variation in the quantity demanded of good Y remains unexplained? What can the student do to increase the explanatory power of his demand equation? What other variables might he add to his demand equation?

What is the expected quantity demanded of good y when PY = 200 and M = 10,000?

If demand decreases and supply increases simultaneously then for sure a. Prices will increase b. Prices will decrease c. Quantities will increase d. Quantities will decrease e. None of the above

Which of the following will increase the demand for chicken? a. An increase in the price of red meats b. A decrease in the price of red meats c. An increase in the price of chicken d. A decrease in the price of chicken e. None of the above

Reference no: EM131236728

Questions Cloud

Demand for beer is characterized by the elasticities : Suppose the demand for beer is characterized by the following elasticities: • Own price elasticity = -2.5 • Cross-price elasticity with soda = +3 • Income elasticity = +2 Based on the given elasticities, If a firm in the industry wishes to increase t..

Transaction in addition to fees customer own bank imposes : You are an aide for the Senate Banking Committee Chairman. He comes to you with a bill that proposes setting limits on what ATM owners can charge non-account holders, over and above what banks charge their own customers. Currently, large banks charge..

Are dvd players normal or inferior goods : The demand function for DVD players has been estimated to be QPlayer = 134 - 1.07PDVD + 46Pm - 2.1PDVD - 5M, where QPlayer is the quantity of DVD players, PDVD is the price of a videocassette, Pm is the price of a movie, PPlayer is the price of a DVD..

Expect to happen to costs within the banking industry : There are over 5,000 banks in the United States—more than 10 times more per person than in other industrialized countries. A recent study suggests that the long-run average cost curve for an individual bank is relatively flat. If Congress took steps ..

Economist is confortable using parameter estimates : This economist is confortable using parameter estimates that are statistically significant at the 10 percent level or better. Does PY have a statistically significant effect on the quantity demanded of good Y? Explain, using the appropriate p-value. ..

Explain using elasticity why the rent skyrocketed : Why did the rice price scheme exist and what was the outcome? Reasons for continued support? Winners and losers from the policy? Explain using elasticity why the rent skyrocketed. What was the amount of water used for the additional rai farmed in the..

Increase in health care usage due to better health insurance : In general, The problem with increase in health care usage due to better health insurance is:

Business owner wants to increase his/her business revenue : If a business owner wants to increase his/her business revenue what should he/she do with the price of the goods he is selling:

What is the market equilibrium quantity : The US market of rice is described by the following domestic supply and demand equations: QdUS = 200 – 2 P , QsUS = -100 + 3 P where QdUS and QsUS represent the quantities demanded and supplied (in millions of tons) and P is the price per ton of rice..

User Account

All Pages