TABLE 13-13 An Econometrician Is Interested in Evaluating the Relationship of Demand

question 105

Multiple Choice

TABLE 13-13
An econometrician is interested in evaluating the relationship 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 13-13, the fitted model for predicting demand in Los Angeles is ________.

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

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Definitions:

Breadwinner

A person who earns money to support their family, typically the sole or primary earner in a household.

Discretionary Income

Money remaining after the costs of basic necessities have been paid.

Basic Necessities

Essential items required for survival, including food, clothing, shelter, and clean water.

Lack of Education

A state or condition where an individual has not received sufficient formal learning or instruction.