3. An economist for the Federal Department of Welfare examines data for several

Question

3. An economist for the Federal Department of Welfare examines data for several families to identify determinants of consumption expenditures. As seen in the table, data are collected on monthly spending in hundreds of dollars along with the number of children in the family and age of the head of household.

Regressing Expenditures on Children produced these results:

The model using Age as a predictor for Expenditure resulted in

Determine if either explanatory variable is significant at the 5% level. Which would you suggest be used to predict mean expenditures?

Children Age Expenditures 3 36 5.2 6 52 9 0 47 3.2 2 32 5 5 58 9.5 6 35 11 1 21 3.5 0 19 2 6 32 11 3 39 6.5 4 41 8

Explanation / Answer

Regressing Expenditures on Children

Regression Analysis

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Regression Analysis

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