Problem 5 (15 points) a. Consider the following regression results: P= 27.8 +2.5 X-18 x² + 0.51 X³-0.23 Xª (18.1) (1.1)

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Problem 5 15 Points A Consider The Following Regression Results P 27 8 2 5 X 18 X 0 51 X 0 23 Xa 18 1 1 1 1 (34.71 KiB) Viewed 63 times

Problem 5 (15 points) a. Consider the following regression results: P= 27.8 +2.5 X-18 x² + 0.51 X³-0.23 Xª (18.1) (1.1) (0.45) (0.45) (0.21) Ỹ = 331+2.3X- 2.1X2 + 0.44 X3 (22.5) (1.0) (0.56) (0.15) Note: standard errors in parenthesis. Both variable X and variable Y are continuous variables. Based on these results, would you drop any variables? Which ones and why? b. In the second regression above calculate the change in the predicted value of Y when X changes from 20 to 21. c. Consider the following regression: 8 = 33.7 +2.9 In X (11.6) (0.88) Note: standard errors in parenthesis. Both variable X and variable Y are continuous variables. What is the correct interpretation of the parameter 2.9 above, in terms of changes in X and Y? (HINT: language. and notation are crucial. It's different to say "X changes by 1" than saying "X changes by 1%"!)