Question

An economist estimates the following model: y = β₀ + β₁x + ε. She would like to construct interval estimates for y when x equals 2. She estimates a modified model where y is the response variable and the explanatory variable is now defined as x⁺ = x – 2. A portion of the regression results is shown in the accompanying table.

Regression Statistics
R Square	0.42
Standard Error	3.86
Observations	12

	Coefficients	Standard Error	t-stat	p-value	Lower 95%	Upper 95%
Intercept	24.78	2.76	8.98	4.2E-06	18.63	30.93
Bedroom	2.52	0.95	2.66	0.0237	0.41	4.63

According to the modified model, which of the following is the predicted value of y when x equals 2?

Multiple Choice

• 2.52

• 24.78

• 27.30

• 29.82

Answer 1

when x = 2

x-2 = 0

hence

y^ = 24.78 + 2.52* (x-2)

= 24.78

option B) is correct