in R Studio, using the wool ridge package,

install.packages("wool ridge")

data('rdchem', package='wooldridge') attach(rdchem)

PROBLEM 1: For the population of firms in the chemical industry, let rd denote annual expenditures on research and development, and let sales denote annual sales (both are in millions of dollars). (i) Write down a model that explains sales in terms of R&D expenditures and interpret the coefficients. What may be the problem with the causal interpretation of the slope coefficient? (ii) Using the data in rdchem from the package "wooldridge", how strong is the (linear) relationship between sales and rd? (iii) Now estimate the model with OLS. Write out the estimated equation in the usual form and interpret the estimated coefficients. What is the problem your estimates are solving? (iv) Plot the data, and the OLS fitted line. Comment on anything that stands out. (v) Compute and comment on the R squared of the fitted model. PROBLEM 1: For the population of firms in the chemical industry, let rd denote annual expenditures on research and development, and let sales denote annual sales (both are in millions of dollars). (i) Write down a model that explains sales in terms of R&D expenditures and interpret the coefficients. What may be the problem with the causal interpretation of the slope coefficient? (ii) Using the data in rdchem from the package "wooldridge", how strong is the (linear) relationship between sales and rd? (iii) Now estimate the model with OLS. Write out the estimated equation in the usual form and interpret the estimated coefficients. What is the problem your estimates are solving? (iv) Plot the data, and the OLS fitted line. Comment on anything that stands out. (v) Compute and comment on the R squared of the fitted model