Chapter 8

An Introduction to Regression Analysis

Until this point, with the exception of covariance and correlation coefficient, the focus has been on a single variable. However, there are few, if any, economic phenomena that can be analyzed solely using its own information. Even in the simplest economic issues such as quantity demanded, there are at least two variables, a quantity and a price. Furthermore, many economic affairs are too complicated to be analyzed and explained fully by merely observing the matter by itself without any consideration to other economics, social, cultural, and political factors that usually affect most economic problems. For example, it does not suffice to analyze data on income in order to determine or forecast ...

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