State casket sales restrictions Refer to the Journal of Law and Economics (February 2008) study of the impact of lifting casket sales restrictions on the cost of a funeral, Exercise 12.123 (p. 779). Recall that data collected for a sample of 1,437 funerals were used to fit the model, E (y) = E (y) = β0 + β1x1 + β2x2 + β3x1x2. where y is the price (in dollars) of a direct burial, x1 = {1 if funeral home is in a restricted state, 0 if not}, and x2 = {1 if price includes a basic wooden casket, 0 if no casket}. The estimated equation (with standard errors in parentheses) is:
(70)(134)(109)
- a. Interpret the reported value of R2.
- b. Use the value of R2 to compute the F-statistic for testing the overall adequacy of the model. Test at α = .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 α = .05.
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