In the baked-in data set in Stata named “auto.dta” the following code: reg price
ID: 3321023 • Letter: I
Question
In the baked-in data set in Stata named “auto.dta” the following code:
reg price length
yields a table giving the following information:
price | Coef. Std. Err. t P>|t| [95% Conf. Interval]
-------------+----------------------------------------------------------------
length | 57.20224 14.08047 4.06 0.000 29.13332 85.27115
_cons | -4584.899 2664.437 -1.72 0.090 -9896.357 726.559
1. Write out exactly what model is estimated here. What can you say about the relationship evaluated?
2. The R-Square is reported as 0.1865. What does that mean?
3. The average length of a car in the data is 187.93. What is the predicted price of this car?
Explanation / Answer
1.
estimated model;
Ycap=57.20224X-4584.889
where Y is a price of the car
x is the average length of a car.
as P value is significant. So, there is a significant relationship between price and length of the car.
2.
as higher the R2 better the model. but where R2 is 0.1865 or 18% hence, a model doesn't fit well to the data
3.
here the length of a car is the data is 187.93 then predicted price is,
Ycap=
Ycap=57.20224X-4584.889
price=5225.4779
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