ECON 6313-001 Spring 2024 Take-Home Project Professor C. Brown 01-26-24 Answer all questions. Please submit your answers in Word (PDF also acceptable). Do NOT submit Excel files. Charts should be copied and pasted from Excel to Word. The Excel file necessary to complete this part was attached to the announcement sent via Canvas. This question is worth 50 points2 points each, except for subparts (a) and (i), which are worth 6 points each, and subpart (j), which is worth 10 points. Use the file \"6313 SP 24 Data for Question 1.\" This file contains 155 monthly observations (2011-1 to 2023-11) on the following variables: LVS: Sales of light vehicles in the United States measured in millions of units (seasonally adjusted annual rate). U: The civilian unemployment rate (percent of the labor force that is unemployed) Gas: Average price per gallon of unleaded gasoline in the U.S. SP: Standard and Poor's Index of 500 stock prices with dividend reinvestment, monthly average. a) Use regression to estimate the following model specification. Report the results of the regressionthat is, report your estimates of 85, 8;, 82, and 8. LVSt = g +lUt + zGaSt + gSPt Are the signs of the (estimated) coefficients consistent with your (prior) expectations? Explain. Suppose that gas prices are projected to rise by 70 cents per gallon in the coming month. Based on the equation you have estimated, what is the predicted effect on LVS in the next month, holding all other factors constant? Be precise. Does the evidence warrant reject the following null hypothesis at the 0.01 significance level? Explain. What would it mean if Hp were true? HD:BS =0 Use the equation you estimated above to obtain a fitted value of LVS for 2021-6. Compute (and report) the ratio of the in-sample forecast error (LVS, LVS,) for this month to the standard error of the regression (SE). Provide an interpretation of this ratio. f) Prepare a chart (not table or spreadsheet) illustrating actual and fitted values of LVS for the period 2011-1 to 2023-11. g) Report the value of R? and provide a (precise) interpretation. h) Set up an F-test. Can you reject null hypothesis at the 1 percent (.01) significance level? i) Use the data contained in \"Forecast\" of your spreadsheet to forecast the value of LVS for 2024-3 to 2024-06 Report your results. j) Estimate the following regression specification and report your results. InLVS: = By + B1InU; + B2InGasy + 3InSP; Can the demand for light vehicles be described as elastic (responsive) to changes in gas or stock prices, other things being equal. Explain and give evidence. 2. This question is worth 10 points Non-Diet Soft Drinks $/12-Pack 8100 12packs a. (4 points) See the diagram above that depicts the demand for non-diet soft drinks. Assume the current price of soft drinks is $3.58 per 12-pack. Compute point elasticity of demand at the current price. Are soft drink companies maximizing profits from the sale of soft drinks? Explain. b. (3 points) Given the following information about product X and product Y from the problem: Revenues per year from product X $20,000 Revenues per year from product Y $80,000 Own price elasticity of demand for product X -3