Task: Please answer in as much detail as possible especially where t-stats are concerned. t-statistics are in parentheses.
A= -207.78 - 0.924P +0.031Y +4.194SNGL + 4.456LFP + 18.287W +1.207CATH
(1.41) (3.22) (3.31) (1.74) (2.57) (1.74) (1.50)
+43.78
(2.12)
R^2 (R squared) = 0.77
N = 50
Where:
A = Number of abortions per 1000 pregnancies of women of childbearing age (15-
45)
P = Price of an abortion
Y = Average income
SNGL = Percentage of females who are single
LFP = Female labor force participation rate
W = 0 or 1 variable; equals 1 for females living in western states, 0 otherwise
CATH = percentage of Catholic population in each state
M = 0 or 1 variable; equals 1 for states that provided Medicaid funding of abortions for all or most medically necessary abortions, exceeding federal requirements
1. Is abortion a normal or inferior good? explain
2. Everything else constant, how many more abortions are demanded in states that provide Medicaid funding beyond the federal requirements, on average? Is this difference statistically significant?
3. Explain the coeficient on LFP. Is this intuitive?
4. If they want to increase revenue, should they increase or lower the price of abourtions, everything else constant?