Instruction 13 -Referring to Instruction 13

question 258

Short Answer

Instruction 13.33
An econometrician is interested in evaluating the relation of demand for building materials to mortgage rates in Sydney and Melbourne. He believes that the appropriate model is
$\begin{array}{l}Y = 10 + 5 X _ { 1 } + 8 X _ { 2 }\\\\\text { where } \begin{aligned}X _ { 1 } & = \text { mortgage rate in } \% \\X _ { 2 } & = 1 \text { if Sydney, } 0 \text { if Melbourne } \\Y & = \text { demand in } \$ 100 \text { per capita }\end{aligned}\end{array}$
-Referring to Instruction 13.33,holding constant the effect of city,each additional increase of 1% in the mortgage rate would lead to an estimated increase of_______________ per capita in the mean demand.

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