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 logistic regression model, with the associated p-values shown in parentheses.

Variable LPM L ogistic 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 at the 5% level.

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 logistic regression model for x1 = 4 with x2 equal to 10 and 20?