Question: A sociologist is looking at the relationship between consumption expenditures of families in the United States (Consumption in $), family income (Income in $), and


A sociologist is looking at the relationship between consumption expenditures of families in the United States (Consumption in $), family income (Income in $), and whether or not the family lives in an urban or rural community (Urban = 1 if urban, 0 otherwise). She collects data on 50 families across the United States, a portion of which is shown in the accompanying table. Click here for the Excel Data File a. Estimate: Consumption = Bo + 81Income + . Compute the predicted consumption expenditures of a family with income of $76,000. Note: Round coefficient estimates to at least 4 decimal places and round final answer to the nearest whole number. Predicted consumption expenditures $ 49,907 b. Include a dummy variable, labeled Urban, with values 1 for urban and 0 otherwise, to predict consumption for a family with income of $76,000 in urban and rural communities. Note: Round coefficient estimates to at least 4 decimal places and round final answer to the nearest whole number. Predicted Consumption Urban community 54,255 Rural community 46,924 c. Include a dummy variable Urban and an interaction variable (Income x Urban) to predict consumption for a family with income of $76,000 in urban and rural communities. Note: Round coefficient estimates to at least 4 decimal places and round final answer to the nearest whole number. Predicted Consumption Urban community 76,818 x Rural community 47,022
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