SCENARIO 14-13 An Econometrician Is Interested in Evaluating the Relationship of Demand

Multiple Choice

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 + 5X1 + 8X2
where X1 = mortgage rate in %
X2 = 1 if SF, 0 if LA
Y = demand in $100 per capita
-Referring to Scenario 14-13, the fitted model for predicting demand in Los Angeles is
________.

A) 10 + 5X1
B) 10 + 13X1
C) 15 + 8X2
D) 18 + 5X2