Question #1

You have collected the following data for Y and for three explanatory variables, X1, X2, and X3. These data can be found in the file ‘6923.Q1(20-2).xls’.

Y          X1   X2            X3

64.9 4.6 2.95 1,998

35.4 3.4 3.40 1,114

29.6 1.3 4.12 1,942

57.5 3.1 4.43 1,998

71.3 6.9 3.82 2,026

72.4 6.1 4.02 1,853

22.8 6.2 3.32 1,641

61.6 5.4 3.80 1,434

52.9 4.1 3.94 1,513

62.9 5.1 3.85 2,008

64.9 2.9 4.69 1,704

70.5 4.8 3.89 1,525

92.2 3.6 3.53 1,842

88.2 7.2 4.96 1,735

66.9 3.6 3.68 1,639

Required:

(a) Estimate the following regression model (using whatever software you would like):

(b) The theory you are testing suggests the following hypotheses. Do you “accept” or reject the following hypotheses? Clearly explain the logic for your decision.

(i) H0: B1 = 0

(ii) H0: B2 = 10

(iii) H0: B3 = 0.100