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What are the consequences in the regression results if multicollinearity is present in the regression model?
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- What is a linear regression model? What is measured by the coefficients ofa linear regression model? What is the ordinary least squares estimator?What is the Role of Control Variables in Multiple Regression?Imagine you are trying to explain the effect of square footage on home sale prices in the United States. You collect a random sample of 100,000 homes that recently sold. a) Homes can be one of three types: single-family houses, townhomes, or condos. How would you control for a home’s type in a regression model? b) Write down a regression model that includes controls for home type, square footage, and number of bedrooms. c) How would you interpret the es3mated coefficients for each of the variables from part b? Be specific.
- In multiple regressions, the correlation coefficient of each independent variable can be measured in addition to the multiple correlation coefficient. How do the values of individual correlation coefficients compare to the value of the multiple correlation coefficient?You are the owner of a restaurant located in a beach resort in Hawaii and want to use regression analysis to estimate the demand for your fresh seafood dinners. You have collected data on the daily quantity of seafood dinners sold over the last summer season. In order to correctly specify your regression equation, which of the following variables should be considered? Select one: A. the prices charged for souvenirs in local stores B. the prices charged for scuba diving excursions at the resort C. the wages paid to your chef and servers D. the daily number of vacationers at the resortConsider the following estimated regression model relating annual salary to years of education and work experience. Estimated Salary=11,681.31+3418.97(Education)+1194.78(Experience) Suppose two employees at the company have been working there for five years. One has a bachelor's degree (8 years of education) and one has a master's degree (10 years of education). How much more money would we expect the employee with a master's degree to make?