C17.9 Use the data in APPLE.RAW for this exercise. These are telephone survey data attempting to elicit the demand for a (fictional) "ecologically friendly" apple. Each family was (randomly) presented with a set of prices for regular apples and the eco-labeled apples. They were asked how many pounds of each kind of apple they would buy. RE Of the 660 families in the sample, how many report wanting none of the eco-labeled apples at the set price? (ii) Does the variable ecolbs seem to have a continuous distribution over strictly positive values? What implications does your answer have for the suitability of a Tobit model for ecolbs? (iii) Estimate a Tobit model for ecolbs with ecoprc, regprc, faminc, and hhsize as explanatory variables. Which variables are significant at the 1% level? (iv) Are the signs of the coefficients on the price variables from part (iii) what you expect? Explain. (v) Let , be the coefficient on ecopre and let be the coefficient on regprc. Test the hypothesis Ho: - B = B against the two-sided alter- native. Report the p-value of the test. (You might want to refer to Sec- tion 4.4 if your regression package does not easily compute such tests.)

SHQ (vi) Obtain the estimates of E(ecolbs|x) for all observations in the sam- ple. [See equation (17.25).] Call these ecolbs. What are the smallest and largest fitted values? (vii) Compute the squared correlation between ecolbs, and ecolbs (viii) Now, estimate a linear model for ecolbs using the same explanatory variables from part (iii). Why are the OLS estimates so much smaller than the Tobit estimates? In terms of goodness-of-fit, is the Tobit model better than the linear model? (ix) Evaluate the following statement: "Because the R-squared from the Tobit model is so small, the estimated price effects are probably inconsistent." S