Question

	df	SS		MS		F	Significance F
Regression	3	156.4823		52.16077		28.01892	0.000002177
Residual	26	48.4023		1.861627
Total	29	204.8846
	Coefficients	P-value
Intercept	23.8163	9.24E-07
Price	-0.3035	0.001925
Price other	-0.342937	0.112442
Income	0.23406	0.033889

A) What is the percent risk of the coefficients really being zero? In other words, are the individual coefficients statistically significant using the 95 percent confidence level?

B) Using the regression summery, compute R² and interpret its meaning.

C) Is the “Price other” coefficient referring to a complement or a substitute (motivate)?

D) Is the “Income” coefficient referring to a normal good or inferior good (motivate)?

Answer 1

Answer for a)

We have Null hypothesis that all these coefficients equal to zero then as per p value

For Price coefficient p value is 0.001925 hence 0.1925% risk of Price coefficient being zero

For Price other coefficient p value is 0.112442 hence 11.24% risk of Price other coefficient being zero

For Income p value is 0.033889 hence 3.39% risk of Income being zero

Answer for B)

R2= ESS/TSS=156.48/204.88=76.37

Answer for C)

Coefficient of Price other is negative hence Price of good decreases/increase with decrease/increase in price of other good This good is complement

Answer for D)

Income has positive coefficint hence as demand increase with with increase in income and decrease in demand with decrease in income hence this good in inferior