The following regression model has been estimated using OLS. The result is provided at the end of the questions. Answer the questions in the present...

Please answer Q8-Q9 with full worked solution (step by step)

8. Elasticity and goodness-of-fit

(a) (5 marks) What is the elasticity of beef consumption with respect to beef price, when evaluated at the sample mean values of the variables? Interpret the elasticity.

(b) (5 marks) Interpret the coefficient of determination (R^2 ).

9. Heteroscedasticity

(a) (5 marks) Test for heteroscedasticity using the Koenker variant of Breusch-Pagan test at 5%.

(b) (5 marks) What are the consequences of heteroscedasticity when all the other standard assumptions are satisfied?

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The following regression model has been estimated using OLS. The result is provided at theend of the questions. Answer the questions in the present section based on this model and theprovided Great! output. BEEF_CONSt = I31 + smear/IE. + fiaBEEF_PR1CE1 + B4PORK_PRICE + at where BEEF_CONS: = consumption of beef per capita in year t (kg),INCOME = real income per capita in year t (thousands of dollars),BEEF_PRICE1 = average real price of beef per kilogram in year t (SE),PORK_PRICE1 = average real price of pork per kilogram in year t ($),flk’s = regression coefficients, and et is the random error term, which follows N(0, 02). If a question requires a statistical test, state clearly the hypotheses, auxiliary regression (ifany), test statistic and its distribution under the null, the observed value of the statistic, thelevel of significance and critical value, the decision, and an interpretation of the test result.Statistical tables are provided at the end of this question booklet.