Please answer 5.3 d and e 2:01--WS5.3 Consider the following model that relates the percentage of a household's budget spent on alcoholWALC to total expenditure TOTEXP, age of the household head AGE, and the number of children inthe household NK.WALC=B₁ + B₂ In(TOTEXP) + B₂NK + BAGE+eThis model was estimated using 1200 observations from London. An incomplete version of this outputis provided in Table 5.6.Output for Exercise 5.3TABLE 5.6Dependent Variable: WALCIncluded observations: 1200VariableCIn(TOTEXP)NKAGER-squaredS.E. of regressionSum squared residCoefficient1.45152.7648-0.150346221.62Std. Error2.20190.36950.0235Jabolt noissgol 5.8 Exa. Fill in the following blank spaces that appear in this table.i. The t-statistic for b₁.ii. The standard error for b₂.iii. The estimate by.iv. R².t-StatisticATSIOOXEMC 5.7103-3.9376-6.4019Mean dependent varallol od tod 6.19434S.D. dependent varmabes (xl) 6.39547114142Prob.0.50990.00000.00010.0000V. 8.b. Interpret each of the estimates b₂, b3, and b₁.c. Compute a 95% interval estimate for B₁. What does this interval tell you?d. Are each of the coefficient estimates significant at a 5% level? Why?e. Test the hypothesis that the addition of an extra child decreases the mean budget share of alcoholby 2 percentage points against the alternative that the decrease is not equal to 2 percentage points.Use a 5% significance level.5.4 Consider the following model that relates the percentage of a household's budget spent on alcohol,WALC, to total expenditure TOTEXP, age of the household head AGE, and the number of children inthe household NK.WALC=B₁ + B₂ In(TOTEXP) + B,NK + BAGE+BAGE² +eSome output from estimating this model using 1200 observations from London is provided in Table 5.7.The covariance matrix relates to the coefficients b, b, and b.2. Find a point estimate and a 95% interval estimate for the change in the mean budget percentageshare for alcohol when a household has an extra child.a marginal effect of AGE on the mean budgetc. Find a point estimate and a 95% interval estimate for the age at which the mean budget percentagepercentage share for alcohol when (i) AGE = 25, (ii) AGE = 50, and (iii) AGE= 75.share for alcohol is at a minimum.d. Summarize what you have discovered from the point and interval estimates in (a), (b), and (c).ally distributed.

Question

Accepted Answer

Given the Regression out put of the model
WALC=β1+β2lnTOTEXP+β3NK+β4AGE+e
This model is estimated…