THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION

question 173

Multiple Choice

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
A researcher is interested in determining the monthly household expenditures on groceries.He models the relationship as follows: Y = β₀ + β₁X₁ + β₂X₂ + β₃X₃ + ε,where Y is the monthly dollar value spent on groceries,X₁ is the household's monthly income,X₂ is the number of people living in the household,and X₃ is a dummy variable = 1 if both the adults in the household work.Taking a sample of 250 households,the researcher gets the following results:
= 172.1 + 0.048x₁ + 33.1x₂ + 43.2x₃.
-How should the researcher interpret the coefficient of the dummy variable?

• A)Households with both adults working approximately spend $43.20 on groceries,under the assumption that all the other independent variables in the model are held constant.
• B)Households with both adults working spend,on average,$43.20 less than other households,under the assumption that all the other independent variables in the model are held constant.
• C)Households with both adults working spend,on average,$43.20 more than other households,under the assumption that all the other independent variables in the model are held constant.
• D)There is no difference between the types of households and their spending on groceries,under the assumption that all the other independent variables in the model are held constant.

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