TABLE 14-12
As a project for his business statistics class,a student examined the factors that determined parking meter rates throughout the campus area.Data were collected for the price ($)per hour of parking,blocks to the quadrangle,and whether the parking is on or off campus.The population regression model hypothesized is Y_i = α + β₁X₁_i + β₂X₂_i + ε
where
Y is the meter price per hour.
X₁ is the number of blocks to the quad.
X₂ is a dummy variable that takes the value 1 if the meter is located on campus and 0 otherwise.
The following Excel results are obtained.
-True or False: An interaction term in a multiple regression model may be used when the relationship between X₁ and Y changes for differing values of X₂.

Question

TABLE 14-12
As a project for his business statistics class,a student examined the factors that determined parking meter rates throughout the campus area.Data were collected for the price ($)per hour of parking,blocks to the quadrangle,and whether the parking is on or off campus.The population regression model hypothesized is Y_i = α + β₁X₁_i + β₂X₂_i + ε
where
Y is the meter price per hour.
X₁ is the number of blocks to the quad.
X₂ is a dummy variable that takes the value 1 if the meter is located on campus and 0 otherwise.
The following Excel results are obtained.

-True or False: An interaction term in a multiple regression model may be used when the relationship between X₁ and Y changes for differing values of X₂.

Quizplus · Accepted Answer

An interaction term allows for the relationship between one independent variable and the dependent variable to vary depending on the value of another independent variable. In this case, the interaction term is between X₁ and X₂, indicating that the relationship between the number of blocks to the quad and the meter price may differ depending on whether the meter is located on campus or off campus. Therefore, the statement is true.

TABLE 14-12 As a Project for His Business Statistics Class,a Student Examined