Consulting has been approached by the State Water Board to undertake a consulting job. With the ever-present threat of drought conditions throughout the State, the Water Board needs to consider whether to apply restrictions and what form these should take. As you may recall there were several types of restrictions that were implemented in the past. The General Manager of the Water Board was prepared to simply use the same restrictions arguing she recalls an average drop in total State consumption of 12% when the restrictions were in place. However, their Chief Economist argued that they needed a more comprehensive evaluation of the impact of those restrictions and their General Manager had agreed and consequently we have been awarded the project. The project will take 8 weeks (excluding weeks 6 and 10). For Week 1, please answer the following questions:1.     What is the goal of the econometric analysis (research question) of the project?2.     Based on the research question, what is the economic hypothesis?3.     Propose an econometric model (population regression) for the economic hypothesis, please clearly state the outcome and the regressor.4.     Bonus question: do you have any initial thoughts about the data required for this project, e.g. what information needs to be collected, the kinds of data, etc.

The goal of the econometric analysis of the project is to evaluate the impact of water restrictions on total state consumption. The research question could be: "What is the effect of different types of water restrictions on total state water consumption?"

The economic hypothesis, based on the research question, could be: "Water restrictions lead to a significant decrease in total state water consumption."

An econometric model for the economic hypothesis could be a simple linear regression model, where the outcome (dependent variable) is the total state water consumption and the regressor (independent variable) is the type of water restriction implemented. The model could be represented as: Y = β0 + β1X + ε, where Y represents total state water consumption, X represents the type of water restriction, β0 is the intercept, β1 is the slope (which measures the effect of water restrictions on consumption), and ε is the error term.

For this project, we would need data on total state water consumption and the types of water restrictions implemented over a certain period. This could include historical data on water consumption levels, the dates and durations of different water restrictions, and potentially other relevant factors such as rainfall levels, temperature, population size, and economic activity. The data could be collected from state records, meteorological data, and potentially surveys or interviews with water users.