Economist
an Economist Is in the Process of Developing a Model

question 4

Essay

Economist
An economist is in the process of developing a model to predict the price of gold.She believes that the two most important variables are the price of a barrel of oil (x₁)and the interest rate (x₂).She proposes the first-order model with interaction $$y = \beta _ { 0 } + \beta _ { 1 } x _ { 1 } + \beta _ { 2 } x _ { 2 } + \beta _ { 3 } x _ { 1 } x _ { 2 } + \epsilon$$ A random sample of 20 daily observations was taken.The computer output is shown below. The regression equation is:
$$y = 115.6 + 22.3 x _ { 1 } + 14.7 x _ { 2 } - 1.36 x _ { 1 } x _ { 2 }$$
$\begin{array}{|l|ccc|}\hline \text { Predictor } & \text { Coef } & \text { SE Coef } & \text { T } \\\hline \text { Constant } & 115.6 & 78.1 & 1.480 \\x_{1} & 22.3 & 7.1 & 3.141 \\x_{2} & 14.7 & 6.3 & 2.333 \\x_{1} x_{2} & -1.36 & 0.52 & -2.615 \\\hline\end{array}$

$$\mathrm { S } = 20.9 \quad \mathrm { R } - \mathrm { Sq } = 55.4 \%$$
ANAL YSIS OF VARIANCE
$\begin{array}{|l|llll|}\hline \text { Source of Variation } & \text { DF } & \text { SS } & \text { MS } & \text { F } \\\hline \text { Regression } & 3 & 8661 & 2887.0 & 6.626 \\\text { Error } & 16 & 6971 & 435.7 & \\\hline \text { Total } & 19 & 15632 & & \\\hline\end{array}$

-Interpret the coefficient b₁.
b₁ = ____________________
Interpretation:

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Definitions:

Merchant Wholesalers

Businesses that buy goods in bulk from manufacturers and sell them, usually in smaller quantities, to retailers or other businesses, but not directly to consumers.

Agents and Brokers

Intermediaries who facilitate the buying and selling process in various markets, often dealing in real estate, insurance, or securities.

Title to Merchandise

The legal right of ownership of goods, indicating that the holder has the right to control the use and disposition of the items.

Broker

An individual or firm that acts as an intermediary between buyers and sellers, typically earning a commission for facilitating transactions.