Using 50 observations, the following regression output is obtained from estimati

Question

Using 50 observations, the following regression output is obtained from estimating y = beta_0 + beta_1x + beta_2d_1 + beta_3d_2 + epsilon. a. Compute for x = 267, d_1 = 1, and d_2 = 0; then compute for x = 267, d_1 = 0, and d_2 = 1. (Round your final answers to 2 decimal places.) d_1 = 1 and d_2 = 0 d_1 = 0 and d_2 = 1 Interpret d_1, and d_2. (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.) when d_1 = 1, y cap is 15.47 units greater than when d_1 0, holding everything else constant when d_2. = 1, y cap is 7.8 units greater than when d_2 = 0, holding everything else constant when d_1.= 1, y cap is 15.47 units less than when d_1 = 0, holding everything else constant when d_2= 1, y cap is 7.8 units less when d_2 = 0, holding everything else constant Are both dummy variables individually significant at the 5% level? No, none of the dummy variables are individually significant at 5% level. No, only the dummy variable d_2 is significant at 5% level. Yes, both dummy variables are individually significant at the 5% level. No, only the dummy variable d_1 is significant at 5% level.

Explanation / Answer

From the given table, we get the regression equation as: ( from the coefficient column of the table )

y = -0.59 + 3.25x -15.47d1 + 7.8d2

For the given x = 267, d1 = 1 and d2 =0 , we get :

y = -0.59 + 3.25*267 -15.47 = 851.69

For the given x = 267, d1 = 0 and d2 =1 , we get :

y = -0.59 + 3.25*267 + 7.8 = 874.96

b-1) Clearly as the sign of the coefficient d1 if negative and that of d2 is positive,

When d1 = 1, predicted y is 15.47 less than when d1 = 0, holding everything constant

When d2 = 1, predicted y is 7.8 greater than when d2 = 0, holding everything constant

Therefore b) and c) are correct here.

B-2) No clearly as the p-value for d1 is greater than 0.05 therefore it is not significant only d2 is . therefore b) is the correct answer here.

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