PLEASE DO PARTS V TO VII. PLEASE !!!!! b. An economist wants to investigate the

Question

PLEASE DO PARTS V TO VII. PLEASE !!!!!

b. An economist wants to investigate the factors that affect household food expenditure. Data from 50 households were collected and processed in Minitab. The regression model is specified below and the Minitab output is presented in Output 5. where E Household Food Expenditure ($'000) X, Household Income X2 = Size of Household X, Inflation Output 5 Coef 5.95 1.95 2.33 0.45 StDev 0.77 0.035 0.8 0.23 t-ratio 2.76 3.64 3.2 1.44 Predictor 0.004 0.000 0.002 0.021 Constant X2 X3 R-sq = 98% R-sq (adj) = 98% Analysis of Variance DF 288 195 483 MS 96 4.239 22.65 0.00 Regression Error Total 46 49 ©The University of the West Indies Course Code: ECON 1005 2016.... page 7 Distinguish between the dependent variable and the independent variables in this output. 12 marks) [1 mark] 3 marks] [2 marks) [4 marks] 3 marks] 3 marks) i. i. Write out the regression equation. iii. Is the coefficient 1 significant? iv. Interpret the value of the coefficient 3. v. Is significantly different from 2. Ovi.Perform the F test vi. Give an interpretation for R-sq and comment on its value. vili. Using the correlation output below, comment on the relationships among the variables 3 marks) Correlation Output X, 0.30 0.89 0.78

Explanation / Answer

V. H0 : 2 = 2

Ha : 2   2

Test statistic

t = (^2 - 2)/ se (^2) = (2.33 - 2)/ 0.8 = .4125

Here tcritical = t46,0.05   = 2.0129

Here t < tcritical so we cannot reject the null hypothesis and can conclude that the 2 is zero.

VI Here F - value = 22.65

and p - value = 0.0000

so we shall reject the null hypothesis and canconclude that the the model is significant overall..

VI. Here R square = 98% = 0.98 so that means 98% of variation in HOusehold food expenditure is explained by the variation in the independent variables.

VIII Here as per correlation output below.

The indendent variable " Household Income" is strongly correlated with "Household food expenditure".THe correlation of 0.89 is strong and having positive direction here.

The another indendent variable " Size of household" is strongly correlated with "Household food expenditure".THe correlation of 0.78 is strong and having positive direction here.

The indendent variable " Inflation" is weekly correlated with "Household food expenditure".THe correlation of -0.30 is very week and having negative direction here.

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