THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
A market researcher is interested in the average amount of money spent per year by college students on clothing.From 25 years of annual data,the following estimated regression was obtained through least squares:
y t = 48.75 +
+
+
where the numbers in parentheses below the coefficients are the coefficient standard errors,and
y = Expenditure per student,in dollars,on clothes
x 1 = Disposable income per student,in dollars,after the payment of tuition,fees,and room and board.
x 2 = Index of advertising,aimed at the student market,on clothes
-Briefly discuss what is meant by the "dummy variable trap".

Question

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
A market researcher is interested in the average amount of money spent per year by college students on clothing.From 25 years of annual data,the following estimated regression was obtained through least squares:
y t = 48.75 +  
+  
+  
where the numbers in parentheses below the coefficients are the coefficient standard errors,and
y = Expenditure per student,in dollars,on clothes
x 1 = Disposable income per student,in dollars,after the payment of tuition,fees,and room and board.
x 2 = Index of advertising,aimed at the student market,on clothes
-Briefly discuss what is meant by the "dummy variable trap".

Quizplus · Accepted Answer

The Answer of THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
A market researcher is interested in the average amount of money spent per year by college students on clothing.From 25 years of annual data,the following estimated regression was obtained through least squares:
y t = 48.75 +  
+  
+  
where the numbers in parentheses below the coefficients are the coefficient standard errors,and
y = Expenditure per student,in dollars,on clothes
x 1 = Disposable income per student,in dollars,after the payment of tuition,fees,and room and board.
x 2 = Index of advertising,aimed at the student market,on clothes
-Briefly discuss what is meant by the "dummy variable trap".