Ine state Water Board thanks ECON2206 Consulting for assisting them in Identitvind the research auestion and suadestind the simple econometric model used to answer it. Your discussions in Week 1 have assisted in deciding what information needs to be collected. In ZU15, a water restriction policy in the torm ot price increases was
imposed in the state. An initial data collection was undertaken containina information on dailv averade water consumption of different households in different locations in New South Wales in the summer of 2015 and the chanaes in water prices as part of the water restriction noliev. The dataset (water week?. dia) can be found unde
the section for Week 2. Based on your proposed econometric model in the Week 1 discussion, the State Water Board considers estimating the following econometric model to find the impact of watel
restrictions
on water conmn
cons=BO+ß1dorice+cons=ß0+ß1dprice+€ (1
where conscons denotes dailv average water consumption at the housenold eve in the summer of 2015 in kilo litres and dn
ricedorice is the chande in water price per KL faced ov each household as part of the water restriction policv in S2015 (ie. 2015 dollars’
1. Use the provided data to il provide summarv statistics for the variables (i.e. provide mean. standard deviation. minimum. and maximum values) and ill estimate the model (1) b OLS. report the estimated values of the constant term and the slope, and the R-sauarec
2. Which Gauss-Markov assumptions are potentiallv not satisfied aiven that data on onlv several places in the State were collected? Explain
3 Internet the R-cmularer