The following is an initial model fitted to annual data for the years 1974–2010. Q = 144.0 – 0.137P - 0.034Pa + 0.214P, - 0.00513Y + 8 where: Qi is the quantity of lamb sold in grams per person per week; P, is the 'real' price of lamb (in pence per kg, 2000 prices); P3 is the 'real' price of beef (in pence per kg, 2000 prices); Pp is the 'real' price of pork (in pence per kg, 2000 prices); Y is households' real disposable income per head (£ per year, 2000 prices); e is the error term that attempts to capture the impact of any other variables that have an impact on the demand for lamb. This model makes it possible to predict what would happen to the demand for lamb if any one of the four explanatory variables changed, assuming that the other variables remained constant. We will assume that the estimated coefficients used throughout this box are all statistically significant. Using equation 1, calculate what would happen, other things being equal, to the demand for lamb if: a. The real price of lamb went up by 10Op per kg; b. The real price of beef went up by 10p per kg; c. The real price of pork fell by 10p per kg; d. Real disposable income per head rose by by £100 per annum.
The following is an initial model fitted to annual data for the years 1974–2010. Q = 144.0 – 0.137P - 0.034Pa + 0.214P, - 0.00513Y + 8 where: Qi is the quantity of lamb sold in grams per person per week; P, is the 'real' price of lamb (in pence per kg, 2000 prices); P3 is the 'real' price of beef (in pence per kg, 2000 prices); Pp is the 'real' price of pork (in pence per kg, 2000 prices); Y is households' real disposable income per head (£ per year, 2000 prices); e is the error term that attempts to capture the impact of any other variables that have an impact on the demand for lamb. This model makes it possible to predict what would happen to the demand for lamb if any one of the four explanatory variables changed, assuming that the other variables remained constant. We will assume that the estimated coefficients used throughout this box are all statistically significant. Using equation 1, calculate what would happen, other things being equal, to the demand for lamb if: a. The real price of lamb went up by 10Op per kg; b. The real price of beef went up by 10p per kg; c. The real price of pork fell by 10p per kg; d. Real disposable income per head rose by by £100 per annum.
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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Transcribed Image Text:12. The diagram shows what happened to the consumption of lamb in the UK over the period 1974–
2015. How can we explain this dramatic fall in consumption? One way of exploring this issue is to
make use of a regression model, which should help us to see which variables are relevant and how they
are likely to affect demand.
140
130
120
110
100
90
80
70
60
50
40
30
20
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
Note: Data from 2015 based on end of financial year.
Source: Based on data in Family Food datasets
UK consumption of lamb: 1974-2017
Grams per person per week
Transcribed Image Text:UK consumption of lamb: 1974-2017
The following is an initial model fitted to annual data for the years 1974-2010.
Q = 144.0 – 0.137PL - 0.034Pa + 0.214Pp - 0.00513Y +2
where:
a is the quantity of lamb sold in grams per person per week;
Pi is the 'real' price of lamb (in pence per kg, 2000 prices);
P3 is the 'real' price of beef (in pence per kg, 2000 prices):
Po is the 'real' price of pork (in pence per kg, 2000 prices);
Y is households' real disposable income per head (£ per year, 2000 prices);
ɛ is the error term that attempts to capture the impact of any other variables that have an impact on
the demand for lamb.
This model makes it possible to predict what would happen to the demand for lamb if any one of the
four explanatory variables changed, assuming that the other variables remained constant. We will
assume that the estimated coefficients used throughout this box are all statistically significant.
Using equation 1, calculate what would happen, other things being equal, to the demand for lamb if:
a. The real price of lamb went up by 10p per kg;
b. The real price of beef went up by 10p per kg;
c. The real price of pork fell by 10p per kg;
d. Real disposable income per head rose by by £100 per annum.
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