Question 8:

A. Log regression:
. regress logoutput logcapital loglabor

Source | SS df MS Number of obs = 27

-------------+------------------------------ F( 2, 24) = 407.50

Model | 5.37753949 2 2.68876975 Prob > F = 0.0000

Residual | .158356562 24 .00659819 R-squared = 0.9714

-------------+------------------------------ Adj R-squared = 0.9690

Total | 5.53589605 26 .212919079 Root MSE = .08123

------------------------------------------------------------------------------

logoutput | Coef. Std. Err. t P>|t| [95% Conf. Interval]

-------------+----------------------------------------------------------------

logcapital | .1398108 .1653906 0.85 0.406 -.2015386 .4811603

loglabor | 2.328398 .5994894 3.88 0.001 1.091112 3.565683

_cons | -11.93657 3.211061 -3.72 0.001 -18.56388 -5.30927

B. Descriptive and Correlation:

Descriptive:
. summarize logoutput logcapital loglabor

Variable | Obs Mean Std. Dev. Min Max

-------------+--------------------------------------------------------

logoutput | 27 4.493912 .4614316 3.579567 4.933337

logcapital | 27 5.134726 .5826074 4.087656 5.881178

loglabor | 27 6.748245 .1607331 6.456769 6.92844

correlation:
. pwcorr logoutput logcapital loglabor

| logout~t logcap~l loglabor

-------------+---------------------------

logoutput | 1.0000

logcapital | 0.9764 1.0000

loglabor | 0.9852 0.9862 1.0000

C. Confidence interval:

. regress logoutput logcapital loglabor

Source | SS df MS Number of obs = 27

-------------+------------------------------ F( 2, 24) = 407.50

Model | 5.37753949 2 2.68876975 Prob > F = 0.0000

Residual | .158356562 24 .00659819 R-squared = 0.9714

-------------+------------------------------ Adj R-squared = 0.9690

Total | 5.53589605 26 .212919079 Root MSE = .08123

------------------------------------------------------------------------------

logoutput | Coef. Std. Err. t P>|t| [95% Conf. Interval]

-------------+----------------------------------------------------------------

logcapital | .1398108 .1653906 0.85 0.406 -.2015386 .4811603

loglabor | 2.328398 .5994894 3.88 0.001 1.091112 3.565683

_cons | -11.93657 3.211061 -3.72 0.001 -18.56388 -5.30927

D. Hypothesis testing at 1%:

. lincom logcapital-1, level(99)

( 1) logcapital = 1

------------------------------------------------------------------------------

logoutput | Coef. Std. Err. t P>|t| [99% Conf. Interval]

-------------+----------------------------------------------------------------

(1) | -.8601892 .1653906 -5.20 0.000 -1.322777 -.3976016

------------------------------------------------------------------------------
 Interpretation
. lincom loglabor-1, level(99)

( 1) loglabor = 1

------------------------------------------------------------------------------

logoutput | Coef. Std. Err. t P>|t| [99% Conf. Interval]

-------------+----------------------------------------------------------------

(1) | 1.328398 .5994894 2.22 0.036 -.3483381 3.005133

Question 8:
E. Log regression:
. regress logoutput logcapital loglabor

Source | SS df MS Number of obs = 27

-------------+------------------------------ F( 2, 24) = 407.50

Model | 5.37753949 2 2.68876975 Prob > F = 0.0000

Residual | .158356562 24 .00659819 R-squared = 0.9714

-------------+------------------------------ Adj R-squared = 0.9690

Total | 5.53589605 26 .212919079 Root MSE = .08123

------------------------------------------------------------------------------

logoutput | Coef. Std. Err. t P>|t| [95% Conf. Interval]

-------------+----------------------------------------------------------------

logcapital | .1398108 .1653906 0.85 0.406 -.2015386 .4811603

loglabor | 2.328398 .5994894 3.88 0.001 1.091112 3.565683

_cons | -11.93657 3.211061 -3.72 0.001 -18.56388 -5.30927

 F. Descriptive and Correlation:
Descriptive:
. summarize logoutput logcapital loglabor

Variable | Obs Mean Std. Dev. Min Max

-------------+--------------------------------------------------------

logoutput | 27 4.493912 .4614316 3.579567 4.933337

logcapital | 27 5.134726 .5826074 4.087656 5.881178

loglabor | 27 6.748245 .1607331 6.456769 6.92844

the sample size of model shows 27 observations. This model shows the normally distribution among
mean and standard deviation.

correlation:
. pwcorr logoutput logcapital loglabor

| logout~t logcap~l loglabor

-------------+---------------------------

logoutput | 1.0000

logcapital | 0.9764 1.0000

loglabor | 0.9852 0.9862 1.0000

 The relationship between logoutput and logcapital shows a strong positive relation as their
value is 0.9764.
 The relationship between logoutput and loglabor shows a strong positive relation as their value
is 0.9852.
 The relationship between logcapital and loglabor shows a strong positive relation as their value
is 0.9862.

G. Confidence interval:

. regress logoutput logcapital loglabor

Source | SS df MS Number of obs = 27

-------------+------------------------------ F( 2, 24) = 407.50

 Model | 5.37753949 2 2.68876975 Prob > F = 0.0000

Residual | .158356562 24 .00659819 R-squared = 0.9714

-------------+------------------------------ Adj R-squared = 0.9690

Total | 5.53589605 26 .212919079 Root MSE = .08123

------------------------------------------------------------------------------

logoutput | Coef. Std. Err. t P>|t| [95% Conf. Interval]

-------------+----------------------------------------------------------------

logcapital | .1398108 .1653906 0.85 0.406 -.2015386 .4811603

loglabor | 2.328398 .5994894 3.88 0.001 1.091112 3.565683

_cons | -11.93657 3.211061 -3.72 0.001 -18.56388 -5.30927

Confidence interval: (capital)

The lower value of confidence interval is -.2015386 and the higher value of Confidence Interval is .
4811603 as the null hypothesis lies inside the range of intervals so, we are failed to reject the null
hypothesis at 5% significance level.

Confidence interval: (labor)

The lower value of confidence interval is 1.091112 and the higher value of Confidence Interval is
3.565683 as the null hypothesis lies outside the range of intervals so, we will reject the null hypothesis
at 5% significance level.

H. Hypothesis testing at 1%:

. lincom logcapital-1, level(99)

( 1) logcapital = 1

------------------------------------------------------------------------------

logoutput | Coef. Std. Err. t P>|t| [99% Conf. Interval]

-------------+----------------------------------------------------------------

(1) | -.8601892 .1653906 -5.20 0.000 -1.322777 -.3976016

------------------------------------------------------------------------------
P-value:
As the P-value in the result is 0.000 which is less than 0.01. so as it is less than 1% so we can
reject the null hypothesis (H0:B2=1).

. lincom loglabor-1, level(99)

( 1) loglabor = 1

------------------------------------------------------------------------------

logoutput | Coef. Std. Err. t P>|t| [99% Conf. Interval]

-------------+----------------------------------------------------------------

(1) | 1.328398 .5994894 2.22 0.036 -.3483381 3.005133

P-value:
As the P-value in the result is 0.036 which is greater than 0.01. so as it is greater than 1% so we
are failed to reject the null hypothesis (H0:B3=1).