In order to estimate a meat demand function, 2000 households were surveyed, and the following results were obtained: Qm=5+1.2Lnl-0.65LnPm+0.3LnPf-0.1POP2- 0.15POP3 Where Qm is the demanded quantity of meat, I is the income, Pm is the price of meat, Pf is the price of Fish, POP3 is the pseudo variable of residential area for those who live in Athens, POP2 is the pseudo variable of the residential area for those that live in Thessaloniki and POP1 is the pseudo variable for those that live in areas outside of Athens/Thessaloniki. 1.what are the interpretations of the coefficients (note that some variables are in logarithmic form)? 2.how would you test the hypothesis that the income elasticity is equal to 1 (that is, if income changes by 1%, the quantity demanded will change by 1% 3.Why the pseudo variable POP1 has not been accounted for in the function ? 4.How would you check the hypothesis that the area of residence does not affect the consumption of meat? 5.From consumer theory we know that if the prices and the income increase by the same percentage the demanded quantity does not change. Please describe analytically how would you check this hypothesis.

In order to estimate a meat demand function, 2000 households were surveyed, and the following results were obtained: Qm=5+1.2Lnl-0.65LnPm+0.3LnPf-0.1POP2- 0.15POP3 Where Qm is the demanded quantity of meat, I is the income, Pm is the price of meat, Pf is the price of Fish, POP3 is the pseudo variable of residential area for those who live in Athens, POP2 is the pseudo variable of the residential area for those that live in Thessaloniki and POP1 is the pseudo variable for those that live in areas outside of Athens/Thessaloniki. 1.what are the interpretations of the coefficients (note that some variables are in logarithmic form)? 2.how would you test the hypothesis that the income elasticity is equal to 1 (that is, if income changes by 1%, the quantity demanded will change by 1% 3.Why the pseudo variable POP1 has not been accounted for in the function ? 4.How would you check the hypothesis that the area of residence does not affect the consumption of meat? 5.From consumer theory we know that if the prices and the income increase by the same percentage the demanded quantity does not change. Please describe analytically how would you check this hypothesis.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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