Economics 383

PROBLEM SET NO. 1

Due Wednesday, Jan. 15, 2020

The following table gives prices and cumulative production of color television sets in the US for 16
consecutive years.

Price Index Cumulative

Production (Millions)
777 3.104
779 5.798
787 10.910
746 16.373
662 22.588
615 28.779
624 34.099
549 41.373
520 50.218
474 60.289
448 68.700
442 74.919
430 83.113
407 92.454
380 103.674
360 113.170

1. Enter the data into Stata. Name the variables PRICE and CUMPR.

2. Start a Stata log file to keep track of the commands you issue and the Stata’s responses.

3. Use the Stata “label” command to label the data “TV price and cumulative production for 16 years.”
Use the “label” command to attach definitions to the variables.

4. Use the “describe” command to list the names and definitions of the variables.

5. List the data. Make sure the data in Stata are the same as the data in the foregoing table.

6. Use the “summarize” command to find the means and standard deviations of the two variables.

7. Generate two new variables, one the natural logarithm of PRICE and the other the natural logarithm of
CUMPR. Name these variables LNPRICE and LNCUMPR.

8. Plot LNPRICE on the vertical axis vs LNCUMPR on the horizontal axis. Print the graph.

9. Find the correlation coefficient of LNPRICE and LNCUMPR. Is the value of the correlation
coefficient consistent with the graph you made in part h? Explain you answer in a Stata comment.

10. Close and print your Stata log file.