Chapter 8
Indicator Variables
8.1 β0, β2, β3, and β4 determine the intercept while the other parameters determine the slope.
8.2 a.
b.
8.3 a. Let

Then

= .42 + 1.77
x1 + .011
x2 + 2.29
x3 + 3.74.
x4 − .45
x5.
b. No,

which is not significant.
c. There is a problem with normality and a pattern to the residuals.
8.4 a. 
= 33.6 − .0457
x1 − .5
x11. No, the
t = −.22 with
p = 0.824 which is not significant.
b. 
= 42.92 − .117
x1 − 13.46
x11 + .082
x1x11. There is a significant interaction between engine displacement and the type of transmission. When the transmission is automatic, = (42.92 − 13.46) ...