Question: In Example 7.2, let noPC be a dummy variable equal to one if the student does not own a PC, and zero otherwise. (i) If

In Example 7.2, let noPC be a dummy variable equal to one if the student does not own a PC, and zero otherwise.

(i) If noPC is used in place of PC in equation (7.6), what happens to the intercept in the estimated equation? What will be the coefficient on noPC? (Hint: Write PC 5 1 2 noPC and plug this into the equation colGPA 5 b^

0 1 d^

0PC 1 b^

1hsGPA 1 b^

2ACT.)

(ii) What will happen to the R-squared if noPC is used in place of PC?

(iii) Should PC and noPC both be included as independent variables in the model? Explain.

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