Question: please answer 5.4 a-c. 6.4 Consider the following model that relates the percentage of a household's budget spent on alcohol, WALC, to total expenditure TOTEXP,

6.4 Consider the following model that relates the percentage of a household's budget spent on alcohol, WALC, to total expenditure TOTEXP, age of the household head AGE, and the number of children in the household NK. WALC=1+2ln(TOTEXP)+3NK+4AGE+5AGE2+e Some output from estimating this model using 1200 observations from London is provided in Table 5.7. The covariance matrix relates to the coefficients b3,b4, and b5. a. Find a point estimate and a 95% interval estimate for the change in the mean budget percentage share for alcohol when a household has an extra child. b. Find a point estimate and a 95% interval estimate for the marginal effect of AGE on the mean budget percentage share for alcohol when (i) AGE=25, (ii) AGE=50, and (iii) AGE=75. c. Find a point estimate and a 95% interval estimate for the age at which the mean budget percentage share for alcohol is at a minimum. d. Summarize what you have discovered from the point and interval estimates in (a), (b), and (c). c. Let X represent all the observations on all the explanatory variables. If (eX) is normally distributed, which of the above interval estimates are valid in finite samples? Which ones rely on a large sample approximation? f. If (eX) is not normally distributed, which of the above interval estimates are valid in finite samples? Which ones rely on a large sample approximation? 5 The Multiple Regression Model
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