ECON 312 Midterm: ECON312 Midterm21Spring2015Solution
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Instructions: this is closed book, closed notes exam, no calculators of any kind are allowed, show all the calculations, if you need more space, use the back of the page, fully label all graphs. Walter decided to study the market for cocaine. He became a drug dealer, and collected a sample of 56 sales of cocaine during the years 1984 -1991. Walter"s r commands and regression output are given below: lm(log(price) ~ log(quant) + qual + trend, data = cocaine) Error t value pr(>|t|) (intercept) 4. 8459719 0. 1024784 47. 288 < 2e-16 *** log(quant) -0. 1265666 0. 0147103 -8. 604 1. 43e-11 *** qual 0. 0002591 0. 0025064 0. 103 0. 918048 trend -0. 0712002 0. 0184587 -3. 857 0. 000318 *** Signif. codes: 0 ***" 0. 001 **" 0. 01 *" 0. 05 . " 0. 1 " 1. Residual standard error: 0. 2545 on 52 degrees of freedom. F-statistic: 41. 32 on 3 and 52 df, p-value: 8. 503e-14: what is the dependent variable in the above regression? log(price, interpret the estimated slope coefficient on log(quant).
