Based on data from 63 counties, the following model was estimated by least squares:ŷ = 0.58 - 0.052x1 - 0.005x2 R2 = 0.17 (0.019) (0.042)whereŷ = growth rate in real gross domestic productx1 = real income per capitax2 = average tax rate, as a proportion of gross national productThe numbers below the coefficients are the coefficient standard errors. After the independent variable X1, real income per capita, was dropped from the model, the regression of growth rate in real gross domestic product on X2, average tax rate, was estimated. This yielded the following fitted model:ŷ = 0.060 - 0.074x2 R2 = 0.072 (0.034)Comment on this result.

Based on data from 63 counties, the following model was estimated by least squares:ŷ = 0.58 - 0.052x1 - 0.005x2 R2 = 0.17 (0.019) (0.042)whereŷ = growth rate in real gross domestic productx1 = real income per capitax2 = average tax rate, as a proportion of gross national productThe numbers below the coefficients are the coefficient standard errors. After the independent variable X1, real income per capita, was dropped from the model, the regression of growth rate in real gross domestic product on X2, average tax rate, was estimated. This yielded the following fitted model:ŷ = 0.060 - 0.074x2 R2 = 0.072 (0.034)Comment on this result.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4: Estimating Demand

Section: Chapter Questions

Problem 4E

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