Instruction 13-11
An econometrician is interested in evaluating the relation of demand for building materials to mortgage rates in Sydney and Melbourne.He believes that the appropriate model is
Y = 10 + 5X₁ + 8X₂
where X₁ = mortgage rate in %
X₂ = 1 if Sydney,0 if Melbourne
Y = demand in $100 per capita
-Referring to Instruction 13-11,the fitted model for predicting demand in Melbourne is ________.

Question

Quizplus · Accepted Answer

In Melbourne, XS1U1B12S1U1B0 = 0, so the model simplifies to Y = 10 + 5XS1U1B11S1U1B0, which corresponds to option D.

Instruction 13-11 An Econometrician Is Interested in Evaluating the Relation of Demand