TABLE 14-13 An Econometrician Is Interested in Evaluating the Relationship of Demand

question 331

Short Answer

TABLE 14-13
An econometrician is interested in evaluating the relationship of demand for building materials to mortgage rates in Los Angeles and San Francisco. He believes that the appropriate model is
Y = 10 + 5X₁ + 8X₂
where X₁ = mortgage rate in %
X₂ = 1 if SF, 0 if LA
Y = demand in $100 per capita
-Referring to Table 14-13, the predicted demand in San Francisco when the mortgage rate is 10% is ________.

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Definitions:

Pareto Optimal

A state of allocation of resources from which it is impossible to reallocate so as to make any one individual or preference criterion better off without making at least one individual or preference criterion worse off.

Marginal Rate

The rate at which one variable changes with respect to a minute change in another variable.

Cheese Doodles

A popular snack food made from cornmeal, cheese coating, and often baked or fried.

Supply Curve

A graphical representation that shows the relationship between the price of a good and the quantity supplied by producers.