Question: Estimate the demand for natural gas by each group (separately) over the entire period using a simple linear regression. With what level of confidence could you conclude that the estimated coefficients are not equal to zero? How do you know? Interpret the estimated coefficients. Are the signs of the estimated coefficients as you would expect?

Note: The data you have are in nominal terms! You must deflate the price values before running the demand estimations. See the document entitled "Hints for Project 5" for information about how to do that.

HINT for Project 5: Go to https://fred.stlouisfed.org/series/CPIAUCSL

That should produce a graph of the CPI data over the years.  Above the graph you will see a button labeled "Download".  Click on that and choose Excel data.  That will give you a spreadsheet with the CPI numbers you can use to convert the nominal prices into constant prices.

Remember, to compute the "real" or constant price in each month, follow the following formula:

If Fred reports the CPI data as something like 100.765, then use this formula:

PriceConstant = Price _i /(CPI _i /100) where i is the current month/year value that you are adjusting.

If Fred reports the CPI data as something like 1.00765, then use this formula:

PriceConstant = Price _i /CPI _i

Submit the regression output along with the answers to the questions.

Price: $2.99

Solution: The downloadable solution consists of 5 pages
Deliverable: Word Document