If you were to estimate the linear probability model for whether or not a student passed their econometrics class and how that relates to if they are a business major (1 if yes, 0 if other), what will the coefficient on the dichotomous business major variable be?
A) The econometrics class pass rate of business majors
B) The econometrics class pass rate of non-business majors
C) The average pass rate of all students
D) The difference in pass rates of business majors and non-business majors

Question

Quizplus · Accepted Answer

The coefficient on the dichotomous business major variable in a linear probability model would represent the difference in the probability of passing the econometrics class between business majors and non-business majors. This is because the coefficient measures the change in the dependent variable (passing the class) associated with a one-unit change in the independent variable (being a business major versus not).

If You Were to Estimate the Linear Probability Model for Whether