ARE 106 Quantitative Methods Midterm Exam, Spring 2017 You must work completely

Question

ARE 106 Quantitative Methods Midterm Exam, Spring 2017 You must work completely independently, All questions and sub-questions are worth 10 points. For Questions 1-4: In the highly competitive fish processing industry, you have data from what you think is a random sample of processing plants. You estimate a model to predict output of plant / in month( using information on labor (L) and capital (Kn) inputs. We know that, given the classical assumptions, your least squares (OLS) estimator for the population parameters is BLUE. For each scenario in questions (1)(4), please choose one the following possibilities, THEN BRIEFLY EXPLAIN WHY IN WORDS a. The OLS estimator is BLUE b. OLS is LUE but not BLUE ce 2, 3 c. OLS is not even U CR1 d. No way to know whether OLS is B, L, or U 1. A new report from the fishing industry points out that the month-to-month swings in tonnage of fish processed are much greater in large plants than in small plants Smal. ts tk:breaks CR2in which thi, isn't homo sedas A collaborator in this study surprises you by saying that only companies that are publically traded on a stock exchange are included in dataset; no data are available for privately-held plants 2. CRI because tnk.hS u accent ive ob the whole AUG

Explanation / Answer

5) b1^ = cov(C,P)/var(P) = -1000/(501-1) /1 = -2

C_bar = b0^ + b1^*P_bar

or 9 = b0 ^ -2*3

b0 ^= 15

6)elasticity = dc/c/(dP/P) = dC/dP * P/C

= b* P/C

at means P_bar =3 ,C_bar = 9

elasticity = -2 * 3/9 = -2/3 = -0.67

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