An Example of the Interaction Term Between Two Independent, Continuous

question 51

Short Answer

An example of the interaction term between two independent, continuous variables is a. $\quad Y _ { i } = \beta _ { 0 } + \beta _ { 1 } X _ { i } + \beta _ { 2 } D _ { i } + \beta _ { 3 } \left( X _ { i } \times D _ { i } \right) + u _ { i }$ .
b. $Y _ { i } = \beta _ { 0 } + \beta _ { 1 } X _ { 1 i } + \beta _ { 2 } X _ { 2 i } + u _ { i }$ .
c. $Y _ { i } = \beta _ { 0 } + \beta _ { 1 } D _ { 1 i } + \beta _ { 2 } D _ { 2 i } + \beta _ { 3 } \left( D _ { 1 i } \times D _ { 2 i } \right) + u _ { i }$ .
d. $Y _ { i } = \beta _ { 0 } + \beta _ { 1 } X _ { 1 i } + \beta _ { 2 } X _ { 2 i } + \beta _ { 3 } \left( X _ { 1 i } \times X _ { 2 i } \right) + u _ { i }$ .

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Definitions:

Partnership

An authorized type of business collaboration where partners share both the management duties and the financial gains.

Corporation

A legal entity separate from its owners, providing them with limited liability, and which can own property, enter contracts, and sue or be sued.

Contract Law

The branch of law that deals with the creation, enforcement, and termination of contracts between parties.

Sole Proprietor

An individual who owns and operates a business by themselves, bearing full responsibility for its debts and legal actions.