Abby Kratz, a Market Specialist at the Market Research Firm

Multiple Choice

Abby Kratz, a market specialist at the market research firm of Saez, Sikes, and Spitz, is analyzing household budget data collected by her firm.Abby's dependent variable is weekly household expenditures on groceries (in $'s) , and her independent variables are annual household income (in $1,000's) and household neighborhood (0 = suburban, 1 = rural) .Regression analysis of the data yielded the following table. $$\begin{array} { | c | c | c | c | c | } \hline & \text { Coefficients } & \text { Stardard Error } & t \text { Statistic } & p \text {-value } \\\hline \text { Intercept } & 19.68247 & 10.01176 & 1.965934 & 0.077667 \\\hline x _ { 1 } \text { (income) } & 1.735272 & 0.174564 & 9.940612 & 1.68 \mathrm { E } - 06 \\\hline x _ { 2 } \text { (neighborhood) } & 49.12456 & 7.655776 & 6.416667 & 7.67 \mathrm { E } - 05 \\\hline\end{array}$$ However, Abby has reasons to believe that actually suburban households have a higher propensity to spend in groceries than rural households, as they tend to make more impulse purchasing decisions.In this new model, the actual income coefficient for the suburban families is 1.735272 $\alpha$ , for some $\alpha$ > 1.If new data confirms that suburban houses with an annual income of $95,773.44 have the same weekly grocery spending as rural households, then $\alpha$ = ______.

A) 1.055587
B) 1.165587
C) 1.245587
D) 1.275587
E) 1.295587