Exploring Microeconomics (MindTap Course List)
7th Edition
ISBN: 9781285859453
Author: Robert L. Sexton
Publisher: Cengage Learning
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Question
Chapter 4, Problem 6P
To determine
(a)
The effect of the
To determine
(b)
The effect of the expected price of Chevrolets to rise in future on the demand for Chevrolets in U.S.
To determine
(c)
The effect of the rise in the income of Americans on the demand for Chevrolets.
To determine
(d)
The effect of the fall in the price of gasoline on the demand for Chevrolets.
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Problem 2
Difference-in-Difference
In the beginning of 2005, Minnesota increased the sales tax on alcohol. Suppose you are
interested in studying the effect of the increase in sale taxes on alcohol on the number of car
accidents due to drinking in Minnesota. Unlike Minnesota, Wisconsin did not change the
sales tax on alcohol. You decide to use a Difference-in-difference (DID) Model. The numbers
of car accidents in each state at the end of 2004 and 2005 are as follows:
Year
Number of car
accidents in Minnesota
Number of car
accidents in Wisconsin
2004
2000
2500
2005
2500
3500
a. Which state is the treatment state and which state is the control state? (10 points)
b. What is the change in the outcome for the treatment group between 2004 and 2005?
(5 points)
C. Can we interpret the change in the outcome for the treatment group between 2004
and 2005 as the causal effect of the policy on car accidents? Explain your answer. (10
points)
d. What is the change in the outcome for the control…
Environmental Economics
Environmental Economics
Chapter 4 Solutions
Exploring Microeconomics (MindTap Course List)
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