Question
In: Statistics and Probability
What is the expected value of your dependent variable when both of your independent variables are...
What is the expected value of your dependent variable when both of your independent variables are equal to zero (using your "best" model)? Does this value make sense practically? Justify your responses.
Solutions
Expert Solution
We fit regression model for two variables as
Y = a + b1(x1) + b2(x2)
When two independent variables are 0
Y= a
So dependent variable value will be intercept value only.
Which would be constant.
Answer :- when both independent variable are zero.expected value of dependent variable will be intercept.which is a constant value.
Q. Does this value make sense practically
It is depend on for which variables we are dealing with.
For predicting salary from education it may be possible that for no education someone will have salary equal to intercept.
But for predicting sales with number of employees it is not possible that will have sale equal to intercept or some value when number of employees are 0.
So it is always depend on set of variables or study to make practical significance of intercept.
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