Question

Using 50 observations, the following regression output is obtained from estimating y = β0 + β1x + β2d1 + β3d2 + ε. Coefficients Standard Error t Stat p-value Intercept −0.61 0.25 −2.44 0.0186 x 2.86 1.04 2.75 0.0085 d1 −13.09 15.40 −0.85 0.3997 d2 6.15 2.05 3.00 0.0043 a. Compute yˆ for x = 260, d1 = 1, and d2 = 0; compute yˆ for x = 260, d1 = 0, and d2 = 1. (Round your answers to 2 decimal places.) yˆ x = 260, d1 = 1 and d2 = 0 x = 260, d1 = 0 and d2 = 1 b-1. Interpret d1 and d2. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) When d1 = 1, ŷ is 13.09 units greater than when d1 = 0, holding everything else constant. unanswered When d2 = 1, ŷ is 6.15 units greater than when d2 = 0, holding everything else constant. unanswered When d1 = 1, ŷ is 13.09 units less than when d1 = 0, holding everything else constant. unanswered When d2 = 1, ŷ is 6.15 units less when d2 = 0, holding everything else constant. unanswered b-2. Are both dummy variables individually significant at the 5% level? No, only the dummy variable d1 is significant at 5% level. Yes, both dummy variables are individually significant at the 5% level. No, none of the dummy variables are individually significant at 5% level. No, only the dummy variable d2 is significant at 5% level. rev: 03_14_2019_QC_CS-162824, 06_11_2019_QC_CS-170121 Next Visit question mapQuestion 2 of 5 Total2 of 5

Answer 1

Using 50 observations, the following regression output is obtained from estimating y = β0 + β1x + β2d1 + β3d2 + ε. Coefficients Standard Error t Stat p-value

Intercept −0.61 0.25 −2.44 0.0186

x 2.86 1.04 2.75 0.0085

d1 −13.09 15.40 −0.85 0.3997

d2 6.15 2.05 3.00 0.0043

a. Compute yˆ for x = 260, d1 = 1, and d2 = 0; compute yˆ for x = 260, d1 = 0, and d2 = 1

The regression equation is,

yˆ = -0.61 + 2.86 x - 13.09 d1 + 6.15 d2

For x = 260, d1 = 1, and d2 = 0,

yˆ = -0.61 + 2.86 * 260 - 13.09 * 1 + 6.15 * 0 = 729.90

For x = 260, d1 = 0, and d2 = 1,

yˆ = -0.61 + 2.86 * 260 - 13.09 * 0 + 6.15 * 1 = 749.14

b-1. Interpret d1 and d2.

When d2 = 1, ŷ is 6.15 units greater than when d2 = 0, holding everything else constant.

When d1 = 1, ŷ is 13.09 units less than when d1 = 0, holding everything else constant

b-2. Are both dummy variables individually significant at the 5% level?

Since the p-value for only d2 is less than 0.05 significance level, the dummy variable d2 is significant.

No, only the dummy variable d2 is significant at 5% level.