The the demand for chicken in the United States, 1960-1982.  To study the per
capita consumption of chicken in the United States, you are given in the following data:

Download:  0723.dat ,  0723.xls

(1) lny regress on lnx2 and lnx3

(2) lny regress on lnx2, lnx3 and lnx4

(3) lny regress on lnx2, lnx3 and lnx5

(4) lny regress on lnx2, lnx3, lnx4 and lnx5

(5) lny regress on lnx2, lnx3, lnx6

     (Eviews) (Rats)
 

(a) Which demand function among the ones given here would you choose, and why?
     (Suggested  Answer)

(b) How would you interpret the coefficients of lnx2 and lnx3 in these models? (Suggested  Answer)

(c) What is the differences between the specification (2) and (4)? (Suggested  Answer)

(d) What problem do you foresee if you adopt the specification (4)? (Suggested  Answer)

(e) Since specification (5) includes the composite price of beef and pork, would you prefer the
     demand function (5) to the Demand function (4)? Why? (Suggested  Answer)

(f) Are pork and / or beef competing or substitute products to chicken? How do you know?
    (Suggested  Answer)

(g) Assume function (5) is the "correct" demand function. Estimate the parameters of this model,
     obtain their standard errors, and R², adjusted R² and modified R². Interpret your results.
     (Eviews)

(h) Now suppose you run the "incorrect " model (2), Assess the consequences of this
     mis-specification by considering the parameters in model (2) and (5) respectively.
    (Suggested  Answer)