You have been hired as a consultant to estimate the demand for various brands of coffee in the market. You are provided with annual price data for two years by U.S. state and the quantities sold. You want to estimate a demand function for coffee using this data. What problems do you think you will encounter if you estimated the demand equation by OLS?
You have been hired as a consultant to estimate the demand for various brands of coffee in the market. You are provided with annual price data for two years by U.S. state and the quantities sold. You want to estimate a demand function for coffee using this data. What problems do you think you will encounter if you estimated the demand equation by OLS?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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4. You have been hired as a consultant to estimate the demand for various brands of
coffee in the market. You are provided with annual
state and the quantities sold. You want to estimate a demand function for coffee
using this data. What problems do you think you will encounter if you estimated
the demand equation by OLS?
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