Answered: You are asked to determine whether…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Transcribed Image Text:You are asked to determine whether laptop brand A charges a higher premium for its laptops than brand B. You observe a sample of six laptops, their prices and brand. You observe a performance benchmark x for each of the laptops. Let (yi, xi) denote the price and performance of laptop i. Your data are: Obs. i=1 i = 2 i = 3 i = 4 i = 5 i = 6 Brand Price A $1000 A $1500 A B B B $2000 $1500 $2000 $2500 Performance 1 2 3 3 4 5 Draw a scatter plot of price vs. performance. Which brand produces more expensive laptops on average in the sample? Would you say this brand charges a higher premium? Explain by writing down an appropriate regression model, estimation results and an intepretation of your results. If you omit brand information from your regression and just regress price on performance, are you likely to over or under-estimate the association between performance and price? Explain by determining the likely sign of the omitted variables bias as in lecture and comparing it with the regression result.

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