Use the sample data for beer consumption in the file beer.dat to

(a) Estimate the coefficients of the demand relation (6.14) using only sample information. Compare and contrast these results to the restricted coefficient results given in (6.19).

(b) Does collinearity appear to be a problem?

(c) Test the validity of the restriction that implies that demand will not change if prices and income go up in the same proportion.

(d) Use model (6.19) to construct a 95% prediction interval for Q when PB ¼ 3:00, PL ¼ 10, PR ¼ 2:00, and I ¼ 50000. (Hint: Construct the interval for ln(Q) and then take antilogs.)

(e) Repeat part

(d) using the unconstrained model from part (a). Comment.