As a business statistics project, a student examined the factors that determine

Question

As a business statistics project, a student examined the factors that determine parking meter rates throughout the campus and downtown area. The campus is a group of buildings located in the center of downtown, with an open central quadrangle. Data were collected for the price of parking per hour and the number of blocks to the quadrangle. In addition, two dummy variables were coded to indicate the location of the parking meter (See below). The population regression model hypothesized is

Yi = ß0 + ß1x1i + ß2x2i + ß3x3i + ei

where
Y is the price per hour
x1 is a numerical variable = the number of blocks to the quadrangle
(Note that if x1 is less than 2, then the meter is on campus; if x1 is less than 3, then the meter is downtown)
x2 is a dummy variable = 1 if inside downtown and off campus, 0 otherwise
x3 is a dummy variable = 1 if outside downtown and off campus, 0 otherwise

The following Excel results are obtained.

Regression Statistics Multiple R 9.9659 R Square 0.9331 Adjusted R Square 0.9294 Standard Error 0.0327 Observations 58 The Quadrangle

Explanation / Answer

Here, we can see that he/she is already outside of downtown and off campus. Hence x2 would be 0 and x3 would be 1. Thus, change in price would occur due to number of blocks i.e. x1. Hence, it would be -0.0045*3=-0.0135. Hence, the correct answer is b. decrease by 0.0135.

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