In examining the determinants of income, data were collected regarding the chara
ID: 3063420 • Letter: I
Question
In examining the determinants of income, data were collected regarding the characteristics of 45 adults, and the regression Y = 1 + 2S + 3D + 3 (S*D )+ u was used, where Y is the annual income (in thousands of dollars), S is his/her years of education, and D is a dummy variable = 1 if the adult is female. If you get = 26.3 + 2.94S - 1.96D + 0.10(S D) when you run the regression, which of the following is true?
A. A man with 10 years of education will earn an expected income of $55,700.
B. The average income for males increases $2940 with each additional year of education.
C. A woman with 10 years of education will earn approximately $960 less than a man with 10 years of education.
D. All of these answers are true.
Explanation / Answer
ere correct option is D ) all of these answers are true
a)for S=10 ; D=0 ;
hence expected income =26.3+2.94*10-1.96*0+0.10*10*0=55.7 ~ $55700 ; true
b)
true as coefficient is S=2.94 ~2940
c)
difference =(-1.96+0.10*10)= -0.96 ~960