A random sample of 30 new hardcover textbooks at a college bookstore was used to estimate the following multiple regression equation:

where Y is the book’s price (in dollars), X is the number of pages in the book, D₁ is a dummy variable that equals 1 if it is a natural sciences book and 0 if it is a social sciences or humanities book, and D₂ is a dummy variable that equals 1 if it is a social sciences book and 0 if it is a natural sciences or humanities book; the standard errors are in parentheses.

a. Which (if any) of the coefficients other than the intercept are statistically significant at the 5 percent level? What does statistically significant at the 5 percent level mean?

b. Interpret each of the coefficients other than the intercept. Does the magnitude of each seem plausible or implausible?

c. Interpret the value of R₂.

Transcribed Image Text:

Y = 16.65 +0.04X+22.12D +0.43D2, R = 0.70 (5.11) (0.01) (5.60) (5.31)