Think About It

  1. 23. Collinearity. Busy areas attract more fast food outlets. In densely populated areas, the number of competitors reduces sales.

  2. 25.

    1. Estimated Salary = b0 + 5 Age + 2 Test Score

    2. Indirect effect.

    3. 12 $M/point.

    4. The partial effect is relevant. It's worth it if you stay longer than 2.5 years since raising the test score by 5 points nets $10,000 annually.

  3. 27.

    1. The correlation of something with itself is 1.

    2. Not without knowing the variance of x1 and y.

    3. The partial and marginal slopes match because the two x− variables are uncorrelated.

  4. 29. The order of the variables in the correlation matrix is Z, X, T, Y (X, Z, T, Y is close).

  5. 31.

    1. City 1. Estimated revenues are: city 1: $312,000/month; city 2: $259,500/month.

    2. The intercept, albeit ...

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