In the Regression Model Yi = β0 + β1Xi

question 24

Multiple Choice

In the regression model Yi = β0 + β1Xi + β2Di + β3(Xi × Di) + ui,where X is a continuous variable and D is a binary variable,β2

• A)is the difference in means in Y between the two categories.
• B)indicates the difference in the intercepts of the two regressions.
• C)is usually positive.
• D)indicates the difference in the slopes of the two regressions.

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Definitions:

Utility

The satisfaction or benefit derived by consumers from consuming a good or service.

Expected Utility

A concept in economics that represents the sum of utilities associated with all possible outcomes, weighted by the probability of each outcome.

Utility

A measure of the satisfaction or happiness that consumers get from consuming goods or services.

Probability

A measure of the likelihood that an event will occur, quantified as a number between 0 and 1.