Abby Kratz,a market specialist at the market research firm of Saez,Sikes,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 ___.

Question

Abby Kratz,a market specialist at the market research firm of Saez,Sikes,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 ___.

Quizplus · Accepted Answer

According to the regression analysis table, the coefficient for the neighborhood variable is 49, which means that households in rural areas spend $49 more per month on groceries compared to suburban households, holding annual income constant. Therefore, Abby's model predicts that the rural household will have higher monthly expenditures on groceries compared to the suburban household.

Abby Kratz,a Market Specialist at the Market Research Firm of Saez,Sikes,and