SCENARIO 14-13
an Econometrician Is Interested in Evaluating the Relationship $$Y = 10 + 5 X _ { 1 } + 8 X _ { 2 }$$

Short Answer

SCENARIO 14-13
An econometrician is interested in evaluating the relationship of demand for building materials to
mortgage rates in Los Angeles and San Francisco. He believes that the appropriate model is $$Y = 10 + 5 X _ { 1 } + 8 X _ { 2 }$$
where
$$\begin{array} { l } \text { where }&\quad X _ { 1 } = \text { mortgage rate in } \% \\&X _ { 2 } = 1 \text { if SF, } 0 \text { if LA } \\&\quad\quad \quad \quad Y = \text { demand in } \$ 100 \text { per capita }\end{array}$$
-Referring to Scenario 14-13, the fitted model for predicting demand in Los Angeles is ________. a) $10 + 5 X _ { 1 }$
b) $10 + 13 X _ { 1 }$
c) $15 + 8 X _ { 2 }$
d) $18 + 5 X _ { 2 }$