Consider the regression model y = β₀+ β₁x + β₂d + β₃xd + ε. If the dummy variable d changes from 0 to 1, the estimated changes in the intercept and the slope are b₀+ b₂ and b₂, respectively.

Question

Quizplus · Accepted Answer

The correct estimated changes in the intercept and the slope when the dummy variable d changes from 0 to 1 are $ \beta_{12} $ and $ \beta_{13} $, respectively. The intercept changes by $ \beta_{12} $ and the slope of x changes by $ \beta_{13} $, not $ \beta_{10} + \beta_{12} $ and $ \beta_{12} $, as initially stated.

Consider the Regression Model Y = β0 + β1x

Consider the Regression Model Y = β₀+ β₁x