ek 8 Question 2, Exercise 12.1 HW Score: 100%, 10 of 10 points Points: 3 of 3 The following questions refer to the panel data regressions summarized in Table 12.1. Suppose that the federal government is considering a new tax on cigarettes that is estimated to increase the retail price by $0.40 per pack. If the current price per pack is $7.50, use the regression in column (1) to predict the change in demand. The expected percentage change in cigarette demand is - 4.89 %. (Round your response to two decimal places.) Construct a 95% confidence interval for the change in demand. The confidence interval is ( - 7.03 %, -2.75 %). (Round your responses to two decimal places.) Suppose that the United States enters a recession, and income falls by 1%. Use the regression in column (1) to predict the change in demand. The expected percentage change in demand is - 0.53 %. (Round your response to two decimal places.) Suppose that the recession lasts less than 1 year. Do you think that the regression in column (1) will be able to reliably predict the effect of income change on cigarette demand? Why or why not? A. The regression in column (1) will not provide a reliable measure of the effect of income change on cigarette demand when recessions last less than addictive and the resp nse of demand to an income decrease will be smaller in the short run than in the long run