Below You Are Asked to Decide on Whether or Not $\hat { q } _ { i } ^ { d }$

question 59

Essay

Below you are asked to decide on whether or not to use a one-sided alternative or a two-sided alternative hypothesis for the slope coefficient. Briefly justify your decision.
(a) $\hat { q } _ { i } ^ { d }$ = $\hat { \beta }$ ₀ + $\hat { \beta }$ _1pi, where q^d is the quantity demanded for a good, and p is its price.
(b) $\hat { p } _ { i } ^ { actual}$ = $\hat { \beta }$ ₀ + $\hat { \beta }$ ₁
$\hat { p } _ { i } ^ { actual}$ , where $\hat { p } _ { i } ^ { actual}$ is the actual house price, and $\hat { p } _ { i } ^ { actual}$ is the assessed house price. You want to test whether or not the assessment is correct, on average.
(c) $\hat { C }$ _i = $\hat { \beta }$ ₀ + $\hat { \beta }$ ₁
$Y _ { i } ^ { d }$ , where C is household consumption, and Y^d is personal disposable income.

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Definitions:

Controlling Influence

Refers to the power exercised by an entity or individual that holds a majority of voting rights in another business, allowing significant influence over its operations and decisions.

Long-term Investments

Investments made by a company intended to be held for a period exceeding one year, often in bonds, stocks, or real estate.

Debt Investments-HTM

Investments in debt securities intended to be held to maturity, reflecting a long-term investment strategy for earning interest income.

Maturity

The due date on which a financial obligation must be repaid in full.