ToolsTableWindowHelpProblem Set 3-edited-Saved to my Mac...erencesMailingsReviewViewO Tell me- vE DEAaBbCcDdEeAaBbCcDdEeAaBbCcDdFeAaBbCcDdEeAaBbCv A vBody TextList ParagraphNormalNo SpacingTable4. Suppose that you are a financial analyst for the popular restaurant chain Applebee's. Theregionalmanager, Ed, is wanting you to estimate the cost curve of the Applebee's in the Northeast district. Hewants you to run the following model:In(Cost) =`& +ªQi +aLonglslandı + uwhere Cost, is the cost of operations on day i, Qi is the number of meals served, and LongIsland; isthe number of Long Islands (an alcoholic beverage) served on day i.You estimate the model and get the following results:SUMMARY OUTPUTRegression StatisticsMultiple RR Square0.480.23Adjusted R Squ0.22Standard Error0.00Observations174ANOVAdfMSFSignificance FSS20.007.59257E-0525.640.00RegressionResidual1710.002.96121E-06Total1730.00Coefficients Standard Error9.23t Stat867.682.25Upper 95%9.210.00P-valueLower 95%Intercept0.010.009.250.00060.000,030.00Long Island0.000.000.00040.002.460.02What is the statistical interpretation of y and a?Focusatv lsTableWindowHeipProblem Set 3-edited-Saved to my MacMailingsReviewViewO Tell meAaBbCcDdEeAaBbCcDdEeAaBbCcDdEeAaBbCcDdEeNormalBody TextList ParagraphNo Spacing3. A function relating wages to years of education and experience is,wage=5+300+edu+700*exper-4+edurexper-2+edu?-3+exper?(a) What is the partial effect of education (edu) on wage? How to interpret the partial effect ofedu onwage?(b) What is the partial effect of experience (exper) on wage? How the interpret the partialeffect ofexper on wage?(c) For someone who has 12 years of education (edu=12) and 5 years of experience (exper=5).How willthe wage change for one more year of education (if increase edu by one year)?EFocustv

Given information: The output of multiple linear regression is given.Multiple linear regression model: A multiple linear regression model is given as y = b0 + b1x1 + b2x2 + …+ bkxk where y is the predicted value of response variable, and x1, x2,…, xk are the k predictor variables. The quantities b1, b2,…, bk are the estimated slopes corresponding to x1, x2,…, xk respectively and b0 is the estimated intercept of the line, from the sample data. A multiple regression equation describes the combined effect of all the predictors in the model. Even when the effect of a particular predictor is being studied from a multiple regression equation, it assumes that the effects of all the other predictors are accounted for.(a). Find the partial effect of education on wage: The multiple linear regression equation is as given below: Wage = 5 + 300*edu + 700*exper – 4*edu*exper – 2*edu2 – 3*exper2. The slope bi in a regression equation is the amount of change in the response variable, y, due to unit increase in the corresponding predictor variable, xi when all other variables are accounted for. The coefficient or slope of the predictor variable “education” in the regression model is bi = 300. The interpretation of the coefficient bi in the regression model is: The wage increases by 300 units for one unit increase in education and when other variables are accounted for.(b). Find the partial effect of experience on wage: The coefficient or slope of the predictor variable “experience” in the regression model is bi = 700. The interpretation of the coefficient bi in the regression model is: The wage increases by 700 units for one unit increase in experience and when other variables are accounted for. (c). Find the predicted wage: The predicted value of wage is obtained as given below: Wage = 5 + 300*12 + 700*5 – 4*12*5 – 2*122 – 3*52 = 6502 The predicted value of wage if education increases by one more year is obtained as given below: Wage = 5 + 300*13 + 700*5 – 4*13*5 – 2*132 – 3*52 = 6732

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3. A function relating wages to years of education and experience is, wage=5+300 edu+700+exper-4+edurexper-2+edu-3 exper? (a) What is the partial effect of education (edu) on wage? How to interpret the partial effect ofedu on wage?

3. A function relating wages to years of education and experience is, wage=5+300 edu+700+exper-4+edurexper-2+edu-3 exper? (a) What is the partial effect of education (edu) on wage? How to interpret the partial effect ofedu on wage?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Tools
Table
Window
Help
Problem Set 3-edited-Saved to my Mac
...
erences
Mailings
Review
View
O Tell me
- v
E DE
AaBbCcDdEe
AaBbCcDdEe
AaBbCcDdFe
AaBbCcDdEe
AaBbC
v A v
Body Text
List Paragraph
Normal
No Spacing
Table
4. Suppose that you are a financial analyst for the popular restaurant chain Applebee's. Theregional
manager, Ed, is wanting you to estimate the cost curve of the Applebee's in the Northeast district. He
wants you to run the following model:
In(Cost) =`& +ªQi +aLonglslandı + u
where Cost, is the cost of operations on day i, Qi is the number of meals served, and LongIsland; is
the number of Long Islands (an alcoholic beverage) served on day i.
You estimate the model and get the following results:
SUMMARY OUTPUT
Regression Statistics
Multiple R
R Square
0.48
0.23
Adjusted R Squ
0.22
Standard Error
0.00
Observations
174
ANOVA
df
MS
F
Significance F
SS
2
0.00
7.59257E-05
25.64
0.00
Regression
Residual
171
0.00
2.96121E-06
Total
173
0.00
Coefficients Standard Error
9.23
t Stat
867.68
2.25
Upper 95%
9.21
0.00
P-value
Lower 95%
Intercept
0.01
0.00
9.25
0.0006
0.00
0,03
0.00
Long Island
0.00
0.00
0.0004
0.00
2.46
0.02
What is the statistical interpretation of y and a?
Focus
atv

ls
Table
Window
Heip
Problem Set 3-edited-Saved to my Mac
Mailings
Review
View
O Tell me
AaBbCcDdEe
AaBbCcDdEe
AaBbCcDdEe
AaBbCcDdEe
Normal
Body Text
List Paragraph
No Spacing
3. A function relating wages to years of education and experience is,
wage=5+300+edu+700*exper-4+edurexper-2+edu?-3+exper?
(a) What is the partial effect of education (edu) on wage? How to interpret the partial effect ofedu on
wage?
(b) What is the partial effect of experience (exper) on wage? How the interpret the partialeffect of
exper on wage?
(c) For someone who has 12 years of education (edu=12) and 5 years of experience (exper=5).How will
the wage change for one more year of education (if increase edu by one year)?
EFocus
tv

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