TABLE 14-14
An econometrician is interested in evaluating the relation of demand for building materials to mortgage rates in Los Angeles and San Francisco. He believes that the appropriate model is
Y = 10 + 5X₁ + 8X₂
where X₁ = mortgage rate in %
X₂ = 1 if SF, 0 if LA
Y = demand in $100 per capita
-Referring to Table 14-14, the fitted model for predicting demand in Los Angeles is .

Question

Quizplus · Accepted Answer

In Los Angeles, XS1U1B12S1U1B0 = 0, so the model simplifies to Y = 10 + 5XS1U1B11S1U1B0, which corresponds to choice A.

TABLE 14-14 an Econometrician Is Interested in Evaluating the Relation of Relation