
MATLAB: An Introduction with Applications
6th Edition
ISBN: 9781119256830
Author: Amos Gilat
Publisher: John Wiley & Sons Inc
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Please show how to answer a), b) and c).

Transcribed Image Text:Figure 5.7 in your textbook shows output from an econometric software program
called EViews that is estimating the relationship between household income and food
expenditure.
(a) Construct a 95% confidence interval for b2. Show all your work.
(b) Test the null hypothesis that there is no relationship between household income
and food expenditure, against the alternative hypothesis that there is a
relationship. Be sure to do all parts of the hypothesis test.
(c) Test the null hypothesis that there is no relationship between household income
and food expenditure, against the alternative hypothesis that there is a positive
relationship. Be sure to do all parts of the hypothesis test.
(d) Which of the above two approaches makes more sense to you as an economist -
the alternative hypothesis (and associated rejection region) in part (b), or the
alternative hypothesis (and associated rejection region) in part (c)? Why?

Transcribed Image Text:Dependent Variable: FOODEXP
Method: Least Squares
Sample: 1 40
Included Observations: 40
Variable
C
INCOME
Coefficient
40.76756
0.128289
Std. Error
22.13865
0.030539
t-Statistic
1.841465
4.200777
Prob.
0.0734
0.0002
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