Question: Refer to Exercise 7.19 about the demand function for chicken in the United States. a. Using the loglinear, or double-log, model, estimate the various auxiliary

Refer to Exercise 7.19 about the demand function for chicken in the United States.

a. Using the log–linear, or double-log, model, estimate the various auxiliary regressions. How many are there?

b. From these auxiliary regressions, how do you decide which regressor(s) is highly collinear? Which test do you use? Show the details of your calculations.

c. If there is significant collinearity in the data, which variable(s) would you drop to reduce the severity of the collinearity problem? If you do that, what econometric problems do you face?

d. Do you have any suggestions, other than dropping variables, to ameliorate the collinearity problem? Explain.

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