AGEC 621
Homework # 4
Due October 10, 2003
This problem is found in Griffiths, W.E., R.C. Hill, and G.G. Judge (GHJ) Learning and
Practicing Econometrics. New York: John Wiley and Sons, 1993, page 427-28-29.
In table 12.5 are data on the weekly sales of a major brand of canned tuna by a
supermarket chain in a large mid-western U.S. city during a recent calendar year. The
variables are:
sal1
= unit sales of brand number 1 canned tuna
pr1 = price per can of brand number 1 canned tuna
pr2,3 = price per can of brands numbers two and three of canned tuna
disp = a dummy variable that takes the value 1 if there is a store display for brand
number 1 during that week, but no newspaper ad; 0 otherwise.
dispad = a dummy variable that takes the value 1 if there is a store display and a
newspaper ad during the week; 0 otherwise
(a) estimate by least squares, the semi-logarithmic model:
ln(sal1) = 1 + 2 pr1 + 3 pr2 + 4 pr3 + 5disp
+ 6dispad + e
(b) discuss and interpret the estimates of 2 , 3 , and 4.
(c) are the signs and relative magnitudes of the estimates of 5 and 6 consistent with
economic logic?
(d) test at a 5% significance level each of the following hypotheses:
(i) Ho: 5 = 0
H1: 5  0
(ii) Ho: 6 = 0
H1: 6  0
(iii) Ho: 5 = 6 = 0
H1: 5 or 6  0
(iv) Ho: 6  5 = 0
H1: 6 < 5
Table 12.5 Sales of Canned Tuna
sal1
apr1
6439
3329
3415
2909
2598
3773
20383
11761
2614
2496
20811
8339
2793
2416
2837
2110
6422
4539
2493
2262
2145
11996
5847
2257
2461
2075
14044
4521
2052
1762
2375
.66
.62
.62
.62
.63
.69
.63
.65
.77
.81
.68
.71
.84
.82
.84
.82
.78
.81
.89
.85
.85
.71
.78
.85
.87
.86
.77
.80
.85
.85
.87
apr2
apr3
.82
.80
.77
.66
.65
.63
.65
.78
.62
.69
.85
.86
.86
.86
.86
.77
.82
.91
.91
.89
.89
.90
.92
.43
.82
.93
.90
.75
.76
.89
.91
.79
.59
.63
.81
.81
.80
.78
.80
.77
.68
.70
.80
.80
.82
.81
.83
.81
.85
.82
.76
.77
.84
.83
.84
.83
.84
.82
.78
.80
.78
.78
disp
1
1
0
0
0
0
0
1
1
1
0
1
1
0
0
0
1
1
0
0
0
0
1
1
0
1
0
0
0
0
0
dispad
0
0
0
0
0
0
1
0
0
0
1
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
1
0
0
0
0