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Finance & Accounting
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Part 1: The Demand for Drink and Tobacco 1. Descriptive Statistics Table 1: Descriptive Statistics of the variables of interest P Q X G  Mean  0.164142  4442.111  5854.911  0.165827  Median  0.171100  4501.000  5771.000  0.164500  Maximum  0.206900  5598.000  8737.000  0.210700  Minimum  0.127100  3454.000  4000.000  0.137400  Std…

Introduction

Dev.  0.025827  11240942  65635008  0.019383  Observations  45  45  45  45 Table 1 above presents the descriptive statistics for our variables of interest. The only point of concern that may arise in this situation is that all the variables reflect some degree of skewness which violates the normality assumption. Additionally, the fact that the number of observations is only 45 may also be a point of concern since this can lead to small sample bias. 2. Time plots Figure 1: Time plot of P There are no seasonal patterns evident in the time plot of P. Figure 2: Time plot of Q The time plot of Q exhibits strong seasonal variations. Figure 3: Time plot of G As is evident from figure 3 above, similar to the time plot of P, the time plot of G also does not exhibit seasonal fluctuations. Figure 4: Time plot of X Figure 4 shows that X also follows a seasonally fluctuating pattern 3. Thus, there is strong evidence of seasonal fluctuations among the Q and X series. This is visible in the oscillatory patterns that these series seem to follow. The series P and G exhibit no seasonal patterns. Additionally, all the series reflect a steady upward trend. Therefore inclusion of seasonal dummies is important since our dependent variable Q does exhibit seasonal fluctuations. ...
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