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You Have Obtained Data on Test Scores and Student-Teacher Ratios

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You have obtained data on test scores and student-teacher ratios in region A and region B of your state. Region B, on average, has lower student-teacher ratios than region A. You decide to run the following regression Yi=β0+β1X1i+β1X2i+β3X3i+uiY _ { i } = \mathcal { \beta } _ { 0 } + \mathcal { \beta } _ { 1 } X _ { 1 i } + \mathcal { \beta } _ { 1 } X _ { 2 i } + \beta _ { 3 } X _ { 3 i } + u _ { i } where X1X _ { 1 } is the class size in region A, X2X _ { 2 } is the difference in class size between region A and B, and X3X _ { 3 } is the class size in region B. Your regression package shows a message indicating that it cannot estimate the above equation. What is the problem here and how can it be fixed?

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There is perfect multicollinearity prese...

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