Please answer question 6 and 7, thank you! 4. Now you will estimate the slope and intercept. Fill in the table to start.Income (x;) Cons (y;) (x; – x) (y; – ỹ) (x; – x)(y: - 7) (x; – x)²971111171392-3-412987122-6-4243698.1295. Calculate the slope and interpret it.6. Calculate the intercept. Does the intercept make sense economically?7. If a person's income is $40,000, how much do you predict that they will spend onconsumption?8. The R-squared, or coefficient of determination, from this regression is 0.844. Interpret theR-squared.

Name: Please answer question 6 and 7, thank you! 4. Now you will estimate th
Uploaded: 2024-03-20T06:46:03.000Z
Channel: Bartleby
Description: Please answer question 6 and 7, thank you! 4. Now you will estimate the slope and intercept. Fill in the table to start.Income (x;) Cons (y;) (x; – x) (y; – ỹ) (x; – x)(y: - 7) (x; – x)²971111171392-3-412987122-6-4243698.1295. Calculate the slope and

Given information, Incomexi Consumptionyi xi-x¯ yi-y¯ xi-x¯yi-y¯ xi-x¯2 9 7 1 1 1 1 11 7 3 1 3 9 5 2 -3 -4 12 9 8 7 0 1 0 0 2 2 -6 -4 24 36 9 8 12 9 x¯ can be calculated as follows: xi-x¯=1∴x¯=xi-1=9-1=8 y¯ can be calculated as follows: yi-y¯=1∴y¯=yi-1=7-1=6 The completed table is as follows: Incomexi Consumptionyi xi-x¯ yi-y¯ xi-x¯yi-y¯ xi-x¯2 9 7 1 1 1 1 11 7 3 1 3 9 5 2 -3 -4 12 9 8 7 0 1 0 0 2 2 -6 -4 24 36 9 8 1 2 2 1 12 9 4 3 12 16 Σxi-x¯=0 Σyi-y¯=0 Σxi-x¯yi-y¯=54 Σxi-x¯2=72 The slope β^ can be calculated as follows: β^=∑i=1nxi-x¯yi-y¯∑i=1nxi-x¯2=5472=0.75 6. The intercept α^ can be calculated as follows: α^=y¯-β^ x¯=6-0.75*8=0 The intercept value does not make any sense economically. In this case, intercept refers to autonomous consumption. Autonomous consumption can be defined as the consumers' expenditures even when there is no disposable income. In an economical sense, it is not possible that a consumer has nil autonomous consumption. Therefore, this intercept value does not make sense economically.7. Person's income x=$40,000 The regression equation is, y=α^+β^ x⇒y=0+0.75x The consumption y expenditure can be calculated as follows: y=0+0.75*40,000=30,000 Therefore, if a person's income is $40,000, then it can be predicted that he will spend $30,000 on consumption.