Question

ECONOMETRICS

A survey of 500 major U.S. manufacturing plants was completed in order to gain information about water pollution near each plant facility. Data have been collected on the amount of WATER POLLUTANTS (PL) found within ½ mile of each plant. (No plants were within 50 miles of each other). The pollutants were measured as the average parts per million based on each gallon of water sampled for each plant. For each plant, the AMOUNT OF WATER (W) used and the AVERAGE RAINFALL (R) was recorded. Plants were classified to be within one of four TYPES (chemical, paper, consumer durable goods, others) and the plant AGE (under 15 years; 15 years or older) was noted. A scale for LOCAL ENVIRONMENTAL REGULATIONS ENFORCEMENT was made (Strong enforcement; Moderate enforcement; Minimal to No Enforcement). Using these data, (20 points)

a. Specify a linear model that would allow you test the effects of the impact of each variable above.

b. Interpret each parameter in your model.

c. Show how you would test the hypothesis that chemical and paper plant pollution is equal.

d. How would you test the impact of local regulation enforcement on plant's pollution

Answer 1

Solution:

Given that,

A survey of 500 major U.S. manufacturing plants

Data have been collected on the amount of WATER POLLUTANTS (PL) found within ½ mile of each plant.   

  The pollutants were measured as the average parts per million​​​​​​​

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