Answer Happy

17 . an A researcher is interested in estimating the supply function of an online car rental service provider as a function of its average price (Price, measured by the average per kilometre price charged for the month of October, 2017). He has data on the price charged and the number of cars available on the road for rent. (Car), for the 250 cities in the U.S. in which the provider operates. However, given that there is simultaneous causality between Price and Car due to the interactions between demand and supply, the supp function cannot be estimated consistently by an OLS regression of Car on Pnce. He, therefore, uses Income (measured by the per capita GDP of a given city in the U.S. for 2017) as an instrument which satisfies the two conditions of instrument validity He uses the two stage least squares (TSLS) estimator of the coefficient on Price which enable him to estimate the supply function Suppose, the sample covariance between Car and Income Scar, income is 114, and the sample covariance between Price and Income. Sincome, Price is 2.17 EL TSLS Let , be the population slope coefficient on price and p1 be the two stage least squares (TSLS) estimator of P1 TSLS The value of 1 will be (Round your answer to two decimal places) Suppose the population supply function of cars as a function of price is of the form Car - Bo + Price;+u; where u, is the error term which incorporates all the factors affecting the supply of cars which are not included in the model Suppose that var[Income - Mincome)4] = 345.14 and cov(Income, Price) = 1 28 TSLS TSLS be the variance of the IV estimator 1 BO Let 2 Therefore, the value of ?- TSLS will be (Round your answer to two decimal places) The 95% confidence interval for the IV estimatory will be (0) Based on the 95% confidence interval, we will the hypothesis 1 = 0 (Round your answers to two decimal places. Enter a minus sign if your answer is negative.)