As a Project for His Business Statistics Class,a Student Examined

question 15

Multiple Choice

As a project for his business statistics class,a student examined the factors that determined parking meter rates throughout the campus area.Data were collected for the price per hour of parking,blocks to the quadrangle,and one of the three jurisdictions: on campus,in downtown and off campus,or outside of downtown and off campus.The population regression model hypothesized is Y = β₀ + β₁X_1i + β₂X_2i + β₃X_3i + ε
Where
Y is the meter price
X₁ is the number of blocks to the quad
X₂ is a dummy variable that takes the value 1 if the meter is located in downtown and off campus and the value 0 otherwise
X₃ is a dummy variable that takes the value 1 if the meter is located outside of downtown and off campus,and the value 0 otherwise
Suppose that whether the meter is located on campus is an important explanatory factor.Why should the variable that depicts this attribute not be included in the model?

• A)Its inclusion will introduce autocorrelation.
• B)Its inclusion will introduce collinearity.
• C)Its inclusion will inflate the standard errors of the estimated coefficients.
• D)Both B and C

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Definitions:

Representative Sample

A subset of a population that accurately reflects the members of the entire population.

Population of Interest

The complete set of individuals or elements who are the subject of study in a statistical analysis.

Hand-picked

Selected with great care or with particular criteria in mind.

T-statistic

A value used in statistical analysis that measures the size of the difference relative to the variation in a sample data set.