Solution Found!
E(y) = ?0 + ?1x1 + ?2x2 + ?3x1x2, where y is the price(in
Chapter 12, Problem 167SE(choose chapter or problem)
State casket sales restrictions. Refer to the Journal of Law and Economics (Feb. 2008) study of the impact of lifting casket sales restrictions on the cost of a funeral, Exercise 12.121 (p. 758). Recall that data collected for a sample of 1,437 funerals were used to fit the model, \(E(y)=\beta_{0}+\beta_{1} x_{1}+\beta_{2} x_{2}+\beta_{3} x_{1} x_{2}\), where y is the price (in dollars) of a direct burial, \(x_{1}=\{1\) if funeral home is in a restricted state, 0 if not \(\}\), and \(x_{2}=\{1\) if price includes a basic wooden casket, 0 if no casket \(\}\). The estimated equation (with standard errors in parentheses) is:
\(\hat{y}=1,432+793 x_{1}-252 x_{2}+261 x_{1} x_{2}, R^{2}=.78\)
(70) (134) (109)
a. Interpret the reported value of \(R^{2}\).
b. Use the value of \(R^{2}\) to compute the F-statistic for testing the overall adequacy of the model. Test at \(\alpha=.05\).
c. Compute the predicted price of a direct burial with a basic wooden casket for a funeral home in a restrictive state.
d. Estimate the difference between the mean price of a direct burial with a basic wooden casket and the mean price of a burial with no casket for a funeral home in a restrictive state.
e. Estimate the difference between the mean price of a direct burial with a basic wooden casket and the mean price of a burial with no casket for a funeral home in a nonrestrictive state.
f. Is there sufficient evidence to indicate that the difference between the mean price of a direct burial with a basic wooden casket and the mean price of a burial with no casket depends on whether the funeral home is in a restrictive state? Test using \(\alpha=.05\).
Text Transcription:
E(y) = beta_0 + beta_{1} x_{1} + beta_{2} x_{2} + beta_{3} x_{1} x_{2}
x_{1} = 1
}
x_{2} = 1
hat{y} = 1,432 + 793 x_{1} - 252 x_{2} + 261 x_{1} x_{2}, R^{2} = .78
R^2
alpha = .05
Questions & Answers
QUESTION:
State casket sales restrictions. Refer to the Journal of Law and Economics (Feb. 2008) study of the impact of lifting casket sales restrictions on the cost of a funeral, Exercise 12.121 (p. 758). Recall that data collected for a sample of 1,437 funerals were used to fit the model, \(E(y)=\beta_{0}+\beta_{1} x_{1}+\beta_{2} x_{2}+\beta_{3} x_{1} x_{2}\), where y is the price (in dollars) of a direct burial, \(x_{1}=\{1\) if funeral home is in a restricted state, 0 if not \(\}\), and \(x_{2}=\{1\) if price includes a basic wooden casket, 0 if no casket \(\}\). The estimated equation (with standard errors in parentheses) is:
\(\hat{y}=1,432+793 x_{1}-252 x_{2}+261 x_{1} x_{2}, R^{2}=.78\)
(70) (134) (109)
a. Interpret the reported value of \(R^{2}\).
b. Use the value of \(R^{2}\) to compute the F-statistic for testing the overall adequacy of the model. Test at \(\alpha=.05\).
c. Compute the predicted price of a direct burial with a basic wooden casket for a funeral home in a restrictive state.
d. Estimate the difference between the mean price of a direct burial with a basic wooden casket and the mean price of a burial with no casket for a funeral home in a restrictive state.
e. Estimate the difference between the mean price of a direct burial with a basic wooden casket and the mean price of a burial with no casket for a funeral home in a nonrestrictive state.
f. Is there sufficient evidence to indicate that the difference between the mean price of a direct burial with a basic wooden casket and the mean price of a burial with no casket depends on whether the funeral home is in a restrictive state? Test using \(\alpha=.05\).
Text Transcription:
E(y) = beta_0 + beta_{1} x_{1} + beta_{2} x_{2} + beta_{3} x_{1} x_{2}
x_{1} = 1
}
x_{2} = 1
hat{y} = 1,432 + 793 x_{1} - 252 x_{2} + 261 x_{1} x_{2}, R^{2} = .78
R^2
alpha = .05
ANSWER:Step 1 of 10
(a)
Interpretation:
The value of 