2- Consider the following model that relates the percentage of a household's budget spent on SFOOD to total expenditure TOTEXP, age of the household head AGE, and the number of children in the household NK. SFOOD-P₁+₂ In(TOTEXP) + PINK+PAGE +P, AGE² + u Using 1200 observations from a survey, this equation was estimated with and without the AGE variables included, giving the following results: SFOOD (se) 8.149+2.884ln(TOTEXP)-1.217NK-0.5699AGE+0.005515AGE (0.382) (0.1790) (0.002332) (0.486) 8=6.2048 SFOOD » –1,206 + 2.152ln(TOTEXP) – 1.421NK (se) (0.482) (0.376) 8= 6.3196 Use an F-test and a 5% significance level to test whether AGE and AGE¹ should be included in the equation.

2- Consider the following model that relates the percentage of a household's budget spent on SFOOD to total expenditure TOTEXP, age of the household head AGE, and the number of children in the household NK. SFOOD-P₁+₂ In(TOTEXP) + PINK+PAGE +P, AGE² + u Using 1200 observations from a survey, this equation was estimated with and without the AGE variables included, giving the following results: SFOOD (se) 8.149+2.884ln(TOTEXP)-1.217NK-0.5699AGE+0.005515AGE (0.382) (0.1790) (0.002332) (0.486) 8=6.2048 SFOOD » –1,206 + 2.152ln(TOTEXP) – 1.421NK (se) (0.482) (0.376) 8= 6.3196 Use an F-test and a 5% significance level to test whether AGE and AGE¹ should be included in the equation.

Linear Algebra: A Modern Introduction

4th Edition

ISBN:9781285463247

Author:David Poole

Publisher:David Poole

Chapter2: Systems Of Linear Equations

Section2.4: Applications

Problem 16EQ

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