The Demand for Lamp UK consumption oflamb: 19742004 140 130 120 110 8 8 .4 1:} Grams per person per week 60 50 4D 30llllllllllllllllllllllllllllll 1974 1976 1979 1980 1992 1984 1996 1998 1990 1992 1994 1995 1999 2000 20022004 The diagram shows what happened to the consumption of lamb in the UK over the period 19742004. How can we explain this dramatic fall in consumption? One way of exploring this issue is to make use of a regression model. which should help us to see which variables are relevant and how they are likely to affect demand. The following is an initial model fitted (using the Microt statistical software package) to annual data for the years 19742004. QL = 170.2 - 0.197PL - 0.069Pe + 0.280Pp - 0.0094Y (1) where o QL is the quantity of lamb sold in grams per person per week; 0 PL is the 'real' price of lamb (in pence per kg, 1985 prices); - P3 is the 'real' price of beef (in pence per kg, 1985 prices); 0 Pp is the 'real' price of pork (in pence per kg, 1985 prices): 0 Y is households' real disposable income per head ( per year, 2002 prices). Question 1: (25 points) This model makes it possible to predict what would happen to the demand for lamb if any one of the four explanatory variables changed. assuming that the other variables remained constant. Using equation (1). calculate what would happen ceteris paribus to the demand for lamb if: the real price of lamb went up by 10p per kg; the real price of beef went up by 10p per kg; the real price of pork fell by 10p per kg; real disposable income per head rose by 100 per annum. 9.0.59: Are the results as you would expect