Use the hard drive data for 2006 and 2007 in Table 1.6 to estimate the model Y = α + β₁D + β₂X + β₃DX + ε, where Y = price, X = size, D = 0 in 2006, and D = 1 in 2007.

a. Interpret your estimate of the coefficient β₁.

b. Interpret your estimate of the coefficient β₂.

c. Interpret your estimate of the coefficient β₃.

d. Calculate a 95 percent confidence interval for β₃.

Transcribed Image Text:

2003 Size (Gigabytes) Table 1.6: Prices of Hard Drives of Various Sizes [16] 2004 2005 2006 2007 80 $155 $115 $85 $80 $70 120 $245 $150 $115 $115 $80 160 $500 $200 $145 $120 $85 200 $749 $260 $159 $140 $100