Write all answers in your blue book and show all work there. Return your exam in
your blue book.
1) a) Open the data for grocery prices on your computer's hard drive.
b) Estimate a model where REAL_PRI is a function of SHARE_PE, DISTANCE, GROUP_TR,
REAL_PRO, CONCENTR and POP_DENS. (If you get stuck here, I'll do this part for you,
so that you can continue on to the rest of the question.)
c) What percentage of REAL_PRI's variation does the model explain?
d) Does the AOV suggest that at least one of the independent variables has statistically
significant effect on REAL_PRI? Explain.
e) If a = .01, which variables have statistically significant effects (two tailed) on REAL_PRI?
(Don't bother with Bonferroni concerns).
f) Now put the regional dummies (NORTH_CE, NORTH_EA and SOUTH) into the model. What
do your results suggest about REAL_PRI in the remaining region?
g) Compare the effect found for POP_DENS (deflated per capita income) in parts b
and f. Offer an econometric explanation of how this effect could change so dramatically.
2) Consider the scatter plots below. For each of the diagrams give a regression
equation with a form that would best capture the pattern you see. Indicate as much
as possible what the values or signs of the coefficients should be for your equations.