Question

1.) Suppose we have the following values for a dependent variable, Y, and three independent variables, X1, X2, and X3. The variable X3 is a dummy variable where 1 = male and 2 = female:X

X1	X2	X3	Y
0	40	1	30
0	50	0	10
2	20	0	40
2	50	1	50
4	90	0	60
4	60	0	70
4	70	1	80
4	40	1	90
6	40	0	70
6	50	1	90
8	80	1	100
9	90	0	80
9	20	1	150

a.) Run the multiple regression in Excel and provide the resulting multiple regression equation.

b.) Provide the R-Square measure. Is this a good regression model? Explain. Use a level of significance of 0.05 in any tests you consider.

c.) Which variables are important in explaining Y when the level of significance is 0.05? Is the dummy variable important at this level of significance? Discuss what coefficients mean regarding the effect of each variable on Y.

d.) Suppose a female with X1= 5 and X2= 80 is selected. What would be her predicted value of Y?

e.) What types of problems might exist in this multiple regression?

Answer 1