Consider a binary response variable y and two explanatory variables x 1 and x2. The follow ing table contains the param eter estimates of the linear probability model (LPM) and the logit model, w ith the associated p-values shown in parentheses.

Variable LPM Logit Constant

– 0.40

(0.03)

– 2.20

(0.01)

x1 0.32

(0.04)

0.98

(0.06)

x2

– 0.04

(0.01)

– 0.20

(0.01)

a. Comment on the significance of the variables.

b. What is the predicted probability im plied by the linear probability model for x1 = 4 w ith x2 equal to 10 and 20?

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