Question

The demand function for good X is Qdx = a + bPx + cM + e, where Px is the price of good X and M is income. Least squares regression reveals that â = 8.27, bˆ = -2.14, cˆ = 0.36, δa = 5.32, δbˆ = 0.41, and δcˆ = 0.22. The R- squared is 0.35.
a. Compute the t- statistic for each of the estimated coefficients.
b. Determine which (if any) of the estimated coefficients are statistically different from zero.
c. Explain, in plain words, what the R-square in this regression indicates.



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  • CreatedApril 18, 2014
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