TABLE 14-14 An Econometrician Is Interested in Evaluating the Relation of Demand

question 91

Multiple Choice

TABLE 14-14
An econometrician is interested in evaluating the relation of demand for building materials to mortgage rates in Los Angeles and San Francisco. He believes that the appropriate model is
Y = 10 + 5X₁ + 8X₂
where X₁ = mortgage rate in %
X₂ = 1 if SF, 0 if LA
Y = demand in $100 per capita
-Referring to Table 14-14, the fitted model for predicting demand in San Francisco is .

• A) 10 + 13X1
• B) 18 + 5X1
• C) 10 + 5X1
• D) 15 + 8X2

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Definitions:

SSR

In statistics, SSR stands for Sum of Squares due to Regression, which measures the variation explained by the regression line.

SSE

A metric indicating the variance between an estimated model's predictions and the actual data, calculated as the sum of squares of errors.

Estimated Regression Equation

A mathematical representation derived from regression analysis that estimates the relationship between variables.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a specified period of time.