An over-the-counter drug manufacturer wants to examine the effectiveness of a new drug in curing an illness most commonly found in older patients. Thirteen patients are given the new drug and 13 patients are given the old drug. To avoid bias in the experiment, they are not told which drug is given to them. To check how the effectiveness depends on the age of patients, the following data have been collected. The variables are Effectiveness = the response variable measured on a scale from 0 to 100,
Age = the age of a patient (in years) ,
Drug = a dummy variable that is 1 for the new drug and 0 for the old drug.
The regression model, Effectiveness = β₀ + β₁Age + β₂Drug + β₃Age × Drug, , is estimated and the following results are obtained. Which of the following is true?

Question

An over-the-counter drug manufacturer wants to examine the effectiveness of a new drug in curing an illness most commonly found in older patients. Thirteen patients are given the new drug and 13 patients are given the old drug. To avoid bias in the experiment, they are not told which drug is given to them. To check how the effectiveness depends on the age of patients, the following data have been collected.

The variables are Effectiveness = the response variable measured on a scale from 0 to 100,
Age = the age of a patient (in years) ,
Drug = a dummy variable that is 1 for the new drug and 0 for the old drug.
The regression model, Effectiveness = β₀ + β₁Age + β₂Drug + β₃Age × Drug, , is estimated and the following results are obtained.

Which of the following is true?

Quizplus · Accepted Answer

The coefficient on the Age × Drug interaction term is negative and statistically significant, indicating that the effectiveness of the new drug relative to the old drug is higher for older patients. The coefficients on the Drug and Age terms are not statistically significant, indicating that the effectiveness of the new drug does not significantly depend on age alone. Therefore, the predicted effectiveness of the new drug is higher only for older patients.

An Over-The-Counter Drug Manufacturer Wants to Examine the Effectiveness of a New