Question 3
a)
H
0
:
β
1
=
β
2
= 0
H
1
: At least one of the
β
i
s is not equal to zero
pvalue of Ftest = 1.07E26 ≈ 0
Conclusion: There is overwhelming evidence to infer that at least one of the explanatory
variables is linearly related to per capita income.
(3)
b)
For every percent increase in the percentage of the population under 15, per capita income
decreases on average by $30.045 holding continent constant.
(2)
c)
b
2
= 273.4328. The average per capita income in Latin America countries is $273.4328 higher
than per capita income in African countries, keeping the percentage of the population under 15
constant (or for a given percentage of the population under 15).
(2)
d)
Predicted value = 1415.5549  30.0455 x 40 + 273.4328 x 1 = 487.16645. The average per
capita income is $487.16645.
(1)
e)
H
0
:
β
2
= 0,
H
1
:
β
2
> 0
pvalue = 1.48E20/2 = 0.74E20 (remember the test in the Excel output is two sided)
Conclusion: There is overwhelming evidence to infer that per capita incomes are significantly
higher in Latin American countries.
(3)
f)
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 Spring '11
 
 Normal Distribution, Regression Analysis, per capita, capita income, capita incomes

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