Equation (11

question 24

Essay

Equation (11.3)in your textbook presents the regression results for the linear probability model.
a. Using a spreadsheet program such as Excel, plot the fitted values for whites and blacks in the same graph, for P/I ratios ranging from 0 to 1 (use 0.05 increments).
b. Explain some of the strengths and shortcomings of the linear probability model using this graph.

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Definitions:

Horizontal Axis

In a graph or chart, the x-axis, representing the independent variable or baseline measurement criteria.

Budget Line

A representation of all the combinations of goods and services a consumer may purchase given current prices within their income level.

Price Of Potatoes

The cost per unit at which potatoes are sold or bought in the market, affected by factors like supply, demand, and production costs.

Horizontal Axis

The x-axis in a graph or chart, typically used to represent the independent variable or to plot time or specific categories.