Problem 1. The file the natural log of the average 1989 prices (logprice) of Bordeaux wines for the vintages 1952 to 1989. (vintage) . the age of each vintage is given by the variable age. These data were part of an analysis of Bordeaux wine by economists OrleyAshenfelter and David Ashmore of princeton university. On the computing of the data, some observations became Not available, NA. Clear those up by deleting them, but the couple that are in between observations, just do the average between the two adjacent observations.
a. create a scatterplot with age on the horizontal axis and the log of price on the vertical axis. Do older wines tend to sell for more than younger wines? Does an older wine always sell for more than a younger wine?
b estimate the relationship logprice = a +b(age)
c. estimate the relationship logprice = a + b(vintage) how does the estimated coefficient on vintage compare with the estimated coefficient of age. Why do the intercepts differ as they do?
d. tell me if the intercepts of each equation and estimates of the slopes are statistically significant. (you can use the rule of 2)
Problem 2. The file contain the natural log of the quantity of white zinfandale (LNQWZ) and the natural log of the own price of white zinfandale (LNPWZ) as well as the natural log of the price of other varieties of wines (LNPCH, LNPM, and LNPCS) It additionally includes a time variable called time, and the level data on quantity and prices which you wont be using this time.
a. copy the data from ch 5 data set into a new excel file that you create and run a regression of the data that has already been converted to logs for you in th form lnqwz = a + b*lnpwz + c*lnpch + d*lnpm +e*lnpcs+f*time+g*peak.
b. from the regression output, identify which of the explanatory variables are statistically significant. what does it mean for a variable to be statistically significant.
c. report the R-squared and provide me with the correct interpretation of this number. what information does it tell me?also report the adjusted R-squared of the regression. why is it necessary to report an adjusted R-quared?
d. from the regression output, tell me what the price elasticity of demand and cross price elasticities of demand are and interpret those numbers. that is, are the goods substitutes compliments and so on using what you learned in your previous lessons and keeping in mind the interpretation of the coefficients as per the discussion in the appendix. Don't forget to use the information about statistical significance from part b to conclude whether goods are related or not related.
f. Identify whether there is a trend that we can identify from the data regarding wine sales. hint, use the coefficient for the time variable to make your assessment. is this trend statistically significant?
Download:- Data file.rar