Question

3. We have the regression, Predicted Annual Vacation Expenditures = 143 + .03*Household Income + 53*Age + 157*Education. [Income is in dollars, Age is average age of adults in the household, and Education is the average education in years for the adults of the household.]

Suppose we have a household with values of Income of $57,000, Age of 42, and Education of 14. What is the predicted annual vacation expenditure for this household?

4. Suppose we run a multiple regression, and for observation 5 we get that Y₅ = ‒4.73 and

Y₅ = ‒4.28. What is the residual for observation 5?

5. Suppose we have the regression, Y = a + b*X + e where X and Y are correlated, but we’re concerned about causation, which we want to get right. We have ruled out the possibilities that (i) X and Y are correlated in the sample, but are not correlated in the population, and (ii) X and Y are correlated in the population, but just by chance. What other possibilities should we consider when we think about causation problems?

Answer 1