l I . 10 Reconsider the example used in Section 1 1 .7 on the supply and demand for fish at the Fulton Fish Market. The data are in the file fultonfish.dat.

(a) Carry out two-stage least squares estimation of the supply equation in equation (11.14). Comment on the signs and significance of the estimated coefficients What is your estimate of the elasticity of supply?

(b) It is possiblet hat bad weather on shorer educesa ttendancea t restaurants,w hich in turn may reduce the demand for fish at the market. Add the variable.
RAINY and COLD to the demand equation in (11.13). Derive the algebrarr reduced form for Ln(PRICE) for this new specification.

(c) Estimate the reduced form you derived in

(b) by least squares. Test the join:
significance of the variables MON, TUE, WED, THU, RAINY, and COLD. N:
these variables jointly significant at the a : 0.05 level? Is the addition of M/l-i and COLD to the demand sufficient to allow reliable two-stage least square'
estimation of the supply equation? Explain.

(d) Obtain two-stage least squares estimates and ordinary least squares estimates c:
the augmented demand equation in part

(b) and the supply equation (11.1-l Discuss the estimates, their signs, and significance. Are the estimates consisten:
with economic theory?

(e) Augment the supply equation with the variable MIXED, which indicates por'{
but not STORMY weather conditons. For the demand equation, use the aug'
mented model in pafi (b).Derive the algebraic reduced form for Ln(PRICD trv this new specification.E stimate this reducedf orm by least squElresT.e stt he joir::
significance of the variables MON, TUE, WED, THU, RAINY and COLD. Ha.
this improved the chances of estimating the supply equation by two-stage lea-r:
squares? Explain your answer.
(f Estimate the supply and demand equations in

(e) by two-stage least squares arr ordinary least squares and discuss the results.