Select the service “Computer Applications” in the United States. Estimate the demand for that good or service. Write a paper in which you address the following:

1. Explain why you have selected it. What made it of interest to you and why?

2 a. Identify/select 10 variables that you believe influence your good’s demand. Of your 10 variables at one must be related to income, one must be a substitute, one must be a complement and one must be a dummy variable. Write out, in model form, the equation for estimating the demand for your good or service.

b. For each variable explain why you have selected it. What makes is so important that you have selected it for your model? Justify its inclusion based upon economic theory. You should write at least one paragraph per variable.

3. What is the expected sign on the coefficient of each of your variables? Justify your answer.

4. For each variable, explain where you will get this data. How accessible and available do you think this data will be and why?

5. Do you believe your model is over identified or under identified? Explain why.

6. Which of your variables are most likely to be multi collinear? Explain why.

7. What, in your model, might cause auto or serial correlation? Explain why.

8. What, in your model, might cause the problem of heteroscedasticity? Explain why.

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I have selected to estimate the demand for computer application in the US since I have interest in the development of application which is my area of specialization Dummy variables which also means qu... View the full answer