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Question 4 Consider the following model for estimating the production function for rice cultivation in the Philippines: Q = 61 + 62A + 63L +
Question 4 Consider the following model for estimating the production function for rice cultivation in the Philippines: Q = 61 + 62A + 63L + 64F + e Here Q= rice output (tonnes), A (land input) = area planted to rice (thousands of square meters), L= farm labour (thousands of person-days), and F = fertilizer applied (thousands of kilograms). The data are on an annual basis for selected farms over the 1990-1997 interval. Note: person-days equal the number of people employed multiplied by the number of days they worked. The following are some of the results obtained by estimating this function: Q=-0.14 + 13.213A +27.505L + 4.592F N= 352, SSR= 7503.0, SSE = 1543.1 Sample means: Q = 6.466, A = 0.2118, L =0.1072, F = 0.1871 a. Give a precise interpretation of any two the estimates of B2, B3, and B4. (3 points) b. Obtain R2 and explain what it tells us. (2 points) c. Predict the change in output if A increases by 0.306 thousand square metres, L falls by 0.1 thousand person-days, and F falls by 0.2815 thousand kilograms. Note: These are simultaneous changes in inputs. (1 point) d. Consider the average farm in this sample. This is the farm at the sample means of Q, A, Land F. For this farm, determine whether the response of output to the land input (A) is inelastic (
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