Question: Refer to Exercise 7.19, which is concerned with the demand for chicken in the United States. There you were given five models. a. What is

Refer to Exercise 7.19, which is concerned with the demand for chicken in the United States. There you were given five models.

a. What is the difference between model 1 and model 2? If model 2 is correct and you estimate model 1, what kind of error is committed? Which test would you apply—equation specification error or model selection error? Show the necessary calculations.

b. Between models 1 and 5, which would you choose? Which test(s) do you use and why?

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