Exercise 1

Linear Regression

Using the data set, regressionexer.dta, perform the following:

1. Estimate the b parameters of the demand functions:

Qdrice = f(monthly income and family size)
lnQdrice = f(lnmonthly income and lnfamily size)
2. Determine whether the dependent variable (Qd) and the independent variable have
significant relationship and interpret R2.
3. Determine the statistical significance of the regression coefficients (bs).
4. Write down the demand equation for each model.
5. Interpret the b coefficients of each model of how the dependent variable (Qd)
changes with respect to any changes in the independent variable(s).
6. Differentiate the scatterplot, R2, Adj. R2, and RMSE and determine the model with the
best fit.
7. Run the diagnostic tests of the best model if it satisfies all the assumptions of a
multiple linear regression.

GROUP 2
“Cooperation really works”

MALVAS, EARL TIMOTHY O. OBLAN, ANNAH JANE D.

APAITAN, SHEILA S. ADVISER: JAVIER, JONSON M.
POLIGRATES, MARY GRACE M.
DIOSO, CHRISTINE U.
BERNARDO, MARY ANNE P.
GAPULAO, ANGELICA G.