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# Mean demand

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An econometrician is interested in evaluating the relation of demand for building materials to mortgage rates in Los Angles and San Francisco. He believes that the appropriate model is

Y = 10 + 5X1 + 8X2

Where X1 = mortgage rate in %
X2 = 1 if San Francisco, 0 if LA
Y = demand in \$100 per capita

Referring to the information above, holding constant the effect of city, each additional increase of 1% in the mortgage rate would lead to an estimated increase of _________ in the mean demand.

A. \$10
B. \$50
C. \$60
D. \$500

https://brainmass.com/statistics/correlation-and-regression-analysis/mean-demand-89718

#### Solution Preview

An econometrician is interested in evaluating the elation of demand for building materials to mortgage rates in Los Angles and San Francisco. He believes that the appropriate model is

Y = 10 + 5X1 + 8X2

Where X1 = mortgage rate in %
X2 = 1 if San Francisco, 0 ...

#### Solution Summary

Solution shows calculations of estimated increase in mean demand.

\$2.19