Temple University

Department of Economics

Economics 615 Econometrics I

Simple Regression

1.  The following data refers to the market for apples, Y, in kg and the price of apples, X, in in pence per kg at 10 different market stalls in the Italian Market in south Philadelphia.

Y 99 91 70 79 60 55 70 101 81 67
X 22 24 23 26 27 24 25 23 22 26

a. Assuming , obtain the OLS estimates of the slope and intercept.

b. Using a test of hypothesis, would you say that this is a demand schedule or a supply schedule?

c. How well does the estimated line fit the data?

d. What is the elasticity of demand/supply for this data?  Evaluate the elasticity at the median price.

e. Take the natural log of Y and of X.  Reestimate the slope and intercept.

f. What is elasticity when you use the logged data?