Question

Using 20 observations, the following regression output is obtained from estimating y = β₀ + β₁x + β₂d + β₃xd + ε.

	Coefficients	Standard Error	t Stat	p-value
Intercept	14.45	3.40	4.25	0.001
x	5.10	0.68	7.50	0.000
d	−6.94	3.47	−2.00	0.063
xd	1.01	0.50	2.02	0.061

a. Compute yˆy^ for x = 12 and d = 1; then compute yˆy^ for x = 12 and d = 0. (Round intermediate calculations to at least 4 decimal places and final answers to 2 decimal places.)

b-1. Is the dummy variable d significant at the 5% level?

• Yes, since we reject the relevant null hypothesis.

• Yes, since we do not reject the relevant null hypothesis.

• No, since we reject the relevant null hypothesis.

• No, since we do not reject the relevant null hypothesis.

b-2. Is the interaction variable xd significant at the 5% level?

• No, since we do not reject the relevant null hypothesis.

• Yes, since we do not reject the relevant null hypothesis.

• No, since we reject the relevant null hypothesis.

• Yes, since we reject the relevant null hypothesis.

Answer 1