Question

Question 4

Which of these are examples of binary response models

	a) using income (measured in dollars) to predict the probability of whether or not someone buys a house
	b) using probability of buying a house to predict income (measured in dollars)
	c) both a and b are examples of binary response models
	d) neither a nor b are examples of binary response models

Question 5

When comparing the possible advantages and disadvantages of the Logistical (Logit) Models versus the Linear Probability Models (LPM), which is true?

	a) LPM can be completed using Excel data analysis regression function, while Logit Models cannot.
	b) Logit Models can be completed using Excel data analysis regression function, while LPM Models cannot.
	c) Either of these types of models can be completed using Excel data analysis regression function
	d) Both of these types of models can be completed using Excel data analysis regression function

Answer 1

We have to answer the above questions:-

Question (1)

# Which of these are examples of binary response models

Answer:-

From all options given to the question,Option (a) is correct answer

" using income (measured in dollars) to predict the probability of whether or not someone buys a house "

Explanation:- As we want to identify the binary response models i.e the model in which response is on the binary scale("yes/no" , " 0 / 1 ",etc).So In option a :: using income (continuous) variable we can predict the probability of house purchasing(Classify values from 0 - 0.5 as 0 and 0.5 - 1 as 1).Hence in this sense our response will become binary(0/1)

Question (2)

# When comparing the possible advantages and disadvantages of the Logistical (Logit) Models versus the Linear Probability Models (LPM), which is true?

Answer:-

Among the options given the correct one is option (a) is correct.

" LPM can be completed using Excel data analysis regression function, while Logit Models cannot "

Explanation:-

If you want to compute the LPM you can use Excel Data Analysis Pack's regression function but we dont have option to perform analysis on Logistical Model(Logit model) in it.To perform Logit analysis we need to install XLSTAT for your current Excel version and then only you can perform LOgit analysis in Excel otherwise not.

So,In this way option (A) is the only correct answer.