Statistics Solutions

[See Steps] The state of Alabama hires an economist to study the demand for distilled spirits. The economist collects the following data from the 50 states

Question: The state of Alabama hires an economist to study the demand for distilled spirits. The economist collects the following data from the 50 states and the District of Columbia:

U.S. Demand for Distilled Spirits

State 1991 Per Capita Cons Price Per Gallon Per Capita Spend by Tourists
Ala 1.15 51.75 764.93
Ask 2.04 54.40 1,897.53
Ariz 1.41 44.90 1,228.91
Ark 1.12 50.50 858.27
Ca 1.43 43.75 1,315.80
Col 1.67 48.5 1,460.36
Con 1.73 57.70 933.00
Del 1.86 44.90 1,111.44
DC 3.83 46.60 4,493.38
Fla 1.84 46.60 1,928.58
GA 1.61 53.20 1,096.02
Ha 1.36 61.70 4,938.85
Ida 1.05 45.25 1,162.72
IL 1.40 44.05 931.88
In 1.16 43.25 624.53
IA 0.92 45.70 824.30
Kan 1.10 49.50 865.90
Ken 1.11 40.60 778.37
La 1.38 39.10 949.57
Maine 1.49 44.50 1,110.47
Mar 1.73 43.95 910.31
Mass 1.73 44.95 1,057.33
Mich 1.43 39.95 693.09
Min 1.56 45.55 824.03
Miss 1.21 42.95 694.77
MO 1.22 42.70 1,045.36
Mont 1.44 43.00 1,462.78
Neb 1.17 48.70 936.69
Nev 3.20 41.10 8,778.58
NH 3.82 34.75 1,011.74
NJ 1.61 49.05 1,160.03
NM 1.20 56.05 1,313.48
NY 1.35 59.20 1,019.55
NC 1.20 43.25 959.67
ND 1.72 46.65 1,063.64
Ohio 0.99 45.50 664.99
Ok 1.04 42.05 732.63
Ore 1.30 48.00 1,113.83
Penn 1.03 43.95 719.60
RI 1.43 48.00 662.24
SC 1.63 45.10 1,121.01
SD 1.42 45.95 949.65
Tenn 1.07 52.25 1,119.43
Tex 1.02 50.35 914.78
Utah 0.75 46.00 1,240.19
Ver 1.60 38.75 1,567.90
Vir 1.15 43.90 1,283.54
WA 1.41 53.50 934.89
WV 0.86 38.65 625.20
Wis 1.71 48.25 749.33
WY 1.67 44.30 2,084.21

Source s: "Per Capita Consumption of Distilled Spirits," Brewer’s Almanac 199 5; data on prices supplied by the Distilled Spirits Council; "Spending by Tourists," CQ’s State Fact Finde r, 1993.

  1. Estimate the demand for distilled spirits for the United States based on the above data. Are all the independent variables significant? At what level of significance?
  2. Use the above data to estimate the average elasticity of demand for distilled spirits in the United States.
  3. Use your regression equation to estimate the elasticity of demand for distilled spirits for the state of Alabama. Is this a valid procedure for estimating Alabama’s demand elasticity? Comment.

Price: $2.99
Solution: The downloadable solution consists of 4 pages
Deliverable: Word Document


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