Abby Ross, a market specialist at the market research firm of Saez, Gann, and Spitz, is analyzing household budget data collected by her firm.Abby's dependent variable is monthly household expenditures on groceries (in $'s), and her independent variables are annual household income (in $1,000's)and household neighbourhood (0 = suburban, 1 = rural).Regression analysis of the data yielded the following table: For two households, one suburban and one rural, Abby's model predicts ___.
A)equal monthly expenditures for groceries
B)the suburban household's monthly expenditures for groceries will be $49 more
C)the rural household's monthly expenditures for groceries will be $49 more
D)the suburban household's monthly expenditures for groceries will be $8 more
E)the rural household's monthly expenditures for groceries will be $49 less

Question

Abby Ross, a market specialist at the market research firm of Saez, Gann, and Spitz, is analyzing household budget data collected by her firm.Abby's dependent variable is monthly household expenditures on groceries (in $'s), and her independent variables are annual household income (in $1,000's)and household neighbourhood (0 = suburban, 1 = rural).Regression analysis of the data yielded the following table:  For two households, one suburban and one rural, Abby's model predicts ___.
A)equal monthly expenditures for groceries 
B)the suburban household's monthly expenditures for groceries will be $49 more 
C)the rural household's monthly expenditures for groceries will be $49 more 
D)the suburban household's monthly expenditures for groceries will be $8 more 
E)the rural household's monthly expenditures for groceries will be $49 less

Quizplus · Accepted Answer

According to the table, the coefficient for the variable "neighbourhood" is 49, indicating that rural households spend $49 more on groceries per month than suburban households. Therefore, the model predicts that the rural household will have higher monthly expenditures on groceries than the suburban household.

Abby Ross, a Market Specialist at the Market Research Firm