a. Starting with the data for problem 6 and the data on the price of a related commodity for the years 1986 to 2005 given below, we estimated the regression for the quantity demanded of a commodity ( which we now label Qx) on the price of the commodity ( which we now label Px) consumer income( which we now label Y) and the price of the related commodity (Pz), and we obtained the following results. ( If you can, run this regression yourself, you should get results identical, or very similar to those given below).
Year 1986 1987 1988 1989 1990
Pz($) 14 15 15 16 17
Year 1991 1992 1993 1994 1995
Pz($) 18 17 18 19 20
Year 1996 1997 1998 1999 2000
Pz($) 20 19 21 21 22
Year 2001 2002 2003 2004 2005
Pz($) 23 23 24 25 25
Qx = 121.86 - 9.50Px + 0.04Y - 2.21Pz
(-5.12) (2.18) (-0.68)
R^2 = 0.9633 F = 167.33 D-W = 2.38
(b). Evaluate the above regression results
(c). What type of commodity is Z? Can you be sure? X and Z are complimentary or substitutes?