1. Estimate the demand for beef as a function of the price of beef, the price of pork,
disposable income, and population. Label this as Model 1. Which independent
variables have a significant impact on the demand for beef?
2. The coefficient for the price of beef indicates that a one-dollar increase in price
leads to how large a decrease in quantity demanded?
3. Estimate the demand for beef as a function of the price of beef, the price of pork,
and per capita disposable income (per capita disposable income=[disposable
income/population]; you have to create this variable from the data). Label this as
Model 2. Which independent variables have a significant impact on the demand
4. Which Model fits the data better? Comment on why, using statistics from the
5. The meat packing company gives you the following assumptions: Price of
beef=$2; price of pork=$2.50; disposable income=$1,000,000; and
population=225. Given this information, use model 1 to complete the following:
a. Estimate of beef demand and a 95% confidence interval around this
b. Estimate total revenue
c. Estimate the following elasticize: Price elasticity, Cross elasticity (that
is, elasticity with respect to Pork price), income elasticity, and population
d. Should the meat packing company increase or decrease the price of beef?
Why or why not?