Based on annual data from 1990-2010, the following regressions were obtained: Mo

Question

Based on annual data from 1990-2010, the following regressions were obtained: Model A: i = 2.69 – 0.48Xi R2 = .66 (.122) (.114) Model B: ln(i) = 0.78 – 0.25ln(Xi) R2 = .74 (.0115) (.049) Where: Yi = cups of coffee consumed by the ith person per day Xi = price of a cup of coffee in dollars ln( ) = natural log of ( ) *Standard errors are reported in parentheses Construct a 95% confidence interval for the slope coefficient in each model. What is this measure telling us? How will consistency in your OLS estimation affect your confidence intervals?

Explanation / Answer

to calculate confidence level, no. of samples is required which is not provided in the question.

as the standard deviation is less for model B so it will be more consistent as compared to other Model A.

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