TABLE 14-12 As a Project for His Business Statistics Class, a Student

question 327

Multiple Choice

TABLE 14-12
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 Yᵢ = α + β₁X₁ᵢ + β₂X₂ᵢ + β₃X₃ᵢ + 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
The following Excel results are obtained.

-Referring to Table 14-12, what is the correct interpretation for the estimated coefficient for X₂?

• A) Holding the effect of the other independent variables constant, the estimated mean difference in costs between parking on campus, and parking outside of downtown and off campus is -$0.24 per hour.
• B) Holding the effect of the other independent variables constant, the estimated mean difference in costs between parking in downtown and off campus, and parking on campus is -$0.24 per hour.
• C) Holding the effect of the other independent variables constant, the estimated mean difference in costs between parking in downtown and off campus, and parking outside of downtown and off campus is -$0.24 per hour.
• D) Holding the effect of the other independent variables constant, the estimated mean difference in costs between parking in downtown and off campus, and parking either outside of downtown and off campus or on campus is -$0.24 per hour.

---

Definitions:

Option Contract

An agreement that gives the holder the choice, but not the obligation, to buy or sell an underlying asset at a set price on or before a certain date.

Foreign Currency

Currency used in a country other than one’s own, reflecting the economic practices and transactions in foreign nations.

Zero Sum Game

A situation in game theory where one participant's gains or losses are exactly balanced by the losses or gains of the other participants.

Options Contracts

Options contracts are agreements between two parties to buy or sell an asset at a predetermined price on or before a specific date.