Question: Starting with the data for problem 6 (see appendix for ch 4 below) and the data on the price related commodity for the years 1986 to 2005 given below, we estimated the regression for the quantity demanded of a commodity (which we now relabel Q_X), on the price of the commodity (which we now label P_X), consumer income (which we now label Y), and the price of the related commodity (P_Z), 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.)

(-5.12) (2.18) (-0.68)

(a) Explain why you think we have chosen to include the price of commodity Z in the above regression. (b) Evaluate the above regression results. (c) What type of commodity is Z? Can you be sure?