Answer to Question #216773 in Microeconomics for Unknown346144

Question

1.     Based on the simple linear equation given below answer the following questions.            

 y=a+Bx+e

a.     Write the dependent variable------.

b.     Write the error term----------.

c.      Write the intercept-------------.

d.     Write the explanatory variable----------

e.     Write the slope -----------. How do you interpret it?

Answer 1

Solution:

a.). The dependent variable is y.

b.). The error term is e.

c.). The intercept is a.

d.). The explanatory variable x.

e.). The slope is B.

The slope is interpreted as rise over run in algebra. It is the core of the simple regression equation also known as the Beta, the coefficient of X. It tells you how much Y changes for each unit change in X.