Instruction 13-11 An Econometrician Is Interested in Evaluating the Relation of Demand

question 119

Multiple Choice

Instruction 13-11
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
Y = 10 + 5X₁ + 8X₂
where X₁ = mortgage rate in %
X₂ = 1 if Sydney,0 if Melbourne
Y = demand in $100 per capita
-Referring to Instruction 13-11,the fitted model for predicting demand in Sydney is ________.

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

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