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Consider the following specification of empirical demand and supply functions in the fresh marketsegment of the carrot industry:2sdQQ a bP ctd eP f W= + += + +a. Should the ordinary least-squares (OLS) method or the two-stage least-squares method (2SLS) method be employed to estimate market demand for carrots? Explain briefly.b. Which variables are endogenous variables in the system? Which variables are exogenous? For the model specified above, is the demand for fresh market carrots identified? Explain why or why not?
1 Since carrots are planted and harvested year-round, carrot prices are computed as average prices for each year.2 Typically farmers make production decisions for the current year using the previous year's crop prices (or a weighted-average of several previous years of crop prices). Since carrots are planted year-round, it is not unreasonable to specify current annual production as a function of current average price of carrots.
c. Using statistical software, estimate the parameters of the empirical demand function specified in part a. Write the estimated industry demand equation for carrots.d. Are the estimated slope parameters of demand statistically significant at the 15 percent level of significance? Are the algebraic signs of the parameter estimates and reasonable? Explain.e. Would you expect the demand for carrots to be elastic or inelastic when measured at the average price over the period of the sample? (Hint: Consider the discussion in Chapter 3 concerning the factors that influence demand elasticity.)f. Compute the price elasticity of demand for carrots measured at the sample mean values of price (P), quantity (Q), and time (t). Is the demand for fresh market carrots elastic, inelastic, or unitary elastic when measured at the sample mean values of P, Q, and t?g. By approximately what percentage amount would the price of carrots have to fall in order for quantity demanded to increase by 10 percent?h. Explain, in quantitative terms, the meaning of the estimate of the slope parameter on t.
An individual wishes to deposit an amount of money now and $100 every six months so that at the end of five years $1,500 will have been accumulated. With interest at 3.97% per year, compounded monthly, how much should be deposited now?
Calculate the BIC with the command estat ic and what is the difference between the predicted values and actual for the AR(1), AR(2) and AR(3) models.
indicate that the short run price elasticity of demand for tires is 0.9. If an increase in the price of petroleum /used in producing tires) causes the market prices of tires to rise from $50 to $60
Assume that Aquafresh own price elasticity is -1.5 and that the Colgate cross price elasticity of demand with respect to Aquafresh price change is 1. How do you interpret the own and cross price elasticities? Which brand is Aquafresh mainly competi..
Calculate the net private benefits of the project to the foreign-owned company, as a net present value and calculate the net social benefits of the project from the viewpoint of the Australian economy, with the same criterion.
Paul can make either "100 bottles of wine and 0 boxes of chocolates" or "0 bottles of wine and 1600 boxes of chocolates" or a combination of wine and chocolates. For parts of this question assume that Paul's PPF reflects the property of constant o..
If the government imposes a tax of $15 a month on the market, what price would the buyer of an Internet service pay?__________ What price would the seller of the Internet service receive?____________________
You are planning to build a new home with approximately 2,000-2,500 gross square feet living space on one floor. In addition, you are planning an attached two car garage (storage space) of approximately 450 gross square feet.
Advertising can inform purchaser, but sellers must incur expenses to advertise. If so, advertising can result in higher prices to customers.
what will happen to equilibrium quantity od peanut butter traded in the market after the 30% increase in the price of peanut butter? stay the same, increase, decrease, or not enough information to tell what will be the expected change in the quant..
the government wants to adopt a fiscal stimulus, but is worried about raising the budget deficit, so, it decided to raise expenditure and taxes by $200 each, what will happen to equilibrium GDP? Creat a new multiplier model graph and show separate..
The table below shows the probability that a mother in a given part of the income distribution (given by the row) will have a daughter in a given part of the income distribution (given by the column). So, for example, the daughter of a women with ..
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