Provide examples of how regression analysis can be used in real life. Demonstrate using the six steps in applied regression analysis. These are the steps as a guide 1. Review the literature and develop the theoretical model. 2. Specify the model: select the independent variables and the functional form. The following components should be specified: a. The independent variables and how they should be measured. b. The functional (mathematical) form of the variables. c. The type of stochastic error term. A mistake in any of the three elements results in a specification error. Dummy variable: takes on the values of one or zero depending on whether a specified condition holds. 3. Hypothesize the expected signs of the coefficients. 4. Collect the data. 5. Estimate and evaluate the equation. a. Are there errors in the variables? 6. Document the results. a. Recognize the difference between the number of digits computed and the number of significant figures.

Provide examples of how regression analysis can be used in real life. Demonstrate using the six steps in applied regression analysis. These are the steps a5 a guide 1. Review the literature and develop the theoretical model. 2. Specify the model: select the independent variables and the functional form. The following components should be specified: a. The independent variables and how they should be measured. b. The functional (mathematical) form of the variables. c. The type of stochastic error term. A mistake in any of the three elements results in a specification error. Dummy variable: takes on the values of one or zero depending on whether a specified condition holds. 3. Hypothesize the expected signs of the coefficients. 4. Collect the data. 5. Estimate and evaluate the equation. a. Are there errors in the variables? 6. Document the results. a. Recognize the difference between the number of digits computed and the number of significant figures