Consider a binary response variable y and two explanatory variables x1 and x2. The following table contains the parameter estimates of the linear probability model (LPM) and the logit model, with the associated p-values shown in parentheses.

Variable..................... LPM............. Logit

Constant.................... −0.40.............−2.20

................................(0.03)............ (0.01)

x1 ..............................0.32...............0.98

................................(0.04)............ (0.06)

x2............................ −0.04............. −0.20

................................(0.01)............ (0.01)

a. Comment on the significance of the variables.

b. What is the predicted probability implied by the linear probability model for x1 = 4 with x2 equal to 10 and 20?

c. What is the predicted probability implied by the logit model for x1 = 4 with x2 equal to 10 and 20?