You Have Obtained Data on Test Scores and Student-Teacher Ratios

Essay

You have obtained data on test scores and student-teacher ratios in region A and region B of your state. Region B, on average, has lower student-teacher ratios than region A. You decide to run the following regression $Y _ { i } = \mathcal { \beta } _ { 0 } + \mathcal { \beta } _ { 1 } X _ { 1 i } + \mathcal { \beta } _ { 1 } X _ { 2 i } + \beta _ { 3 } X _ { 3 i } + u _ { i }$ where $X _ { 1 }$ is the class size in region A, $X _ { 2 }$ is the difference in class size between region A and B, and $X _ { 3 }$ is the class size in region B. Your regression package shows a message indicating that it cannot estimate the above equation. What is the problem here and how can it be fixed?