Interpreting the intercept in a sample regression function is
A)not reasonable because you never observe values of the explanatory variables around the origin.
B)reasonable because under certain conditions the estimator is BLUE.
C)reasonable if your sample contains values of Xi around the origin.
D)not reasonable because economists are interested in the effect of a change in X on the change in Y.

Question

Quizplus · Accepted Answer

The intercept in a sample regression function can be interpreted if the sample contains values of the explanatory variable(s) around the origin. It represents the predicted value of the dependent variable when all the explanatory variables are equal to zero. If the sample does not contain values around the origin, the intercept cannot be interpreted. Option A is incorrect because it is possible to have values of the explanatory variables around the origin in a sample. Option B is partially correct because if the estimator is BLUE, then the intercept can be interpreted, but this is not the only condition that needs to be met. Option D is incorrect because the intercept is still important in interpreting the overall relationship between X and Y, even though economists may be interested in the effect of a change in X on the change in Y.

Interpreting the Intercept in a Sample Regression Function Is