Cities often want to determine how much additional law enforcement will decrease their murder rates. A simple model with cross-section data at the provincial level to address this question is (1) murdpc=Bo+Bipolpc+Bzincpc+Bspvty+u where murdpc is murders per capita, polpc is number of police officers per capita, incpc is income per capita and pvty is the percent of people in the city that are below a poverty line and u is the error term. Suppose that the supply of polpc is a function of murdpc described by the following equation

Cities often want to determine how much additional law enforcement will decrease their murder rates. A simple model with cross-section data at the provincial level to address this question is (1) murdpc=Bo+Bipolpc+Bzincpc+Bspvty+u where murdpc is murders per capita, polpc is number of police officers per capita, incpc is income per capita and pvty is the percent of people in the city that are below a poverty line and u is the error term. Suppose that the supply of polpc is a function of murdpc described by the following equation

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4: Estimating Demand

Section: Chapter Questions

Problem 1.4CE

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Demand can be estimated with experimental data, time-series data, or cross-section data. In this case, cross-section data appear in the Excel file. Soft drink consumption in cans per capita per year is related to six-pack price, income per capita, and mean temperature across the 48 contiguous states in the United States. Questions Howmanycans/capita/yearonsoftdrinkshouldbeforastateinwhich6-packprice=$1.95,Income/Capita=$23,500, and Mean Temp= 68 F ? Now omit the price and temperature from the regression equation. Should a marketing plan for soft drinks be designed that relocates most canned drink machines into low-income neighborhoods ? Why or why not ? TABLE 1. SOFT DRINK DEMAND DATA State Cans/Capita/Yr 6-Pack Price ($) Income/Capita ($1,000) Mean Temp. (F) Alabama 200 2.19 11.7 66 Arizona 150 1.99 15.3 62 Arkansas 237 1.93 9.9 63 California 135 2.59 22.5 56 Colorado 121 2.29 17.1 52 Connecticut 118 2.49 24.3 50 Delaware 217 1.99 25.2 52 Florida 242…
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