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Question 2: Consider the following data on 10 students: (a) Calculate the values of ^0 and ^1 for the simple linear regression model given by: food i=^0+^1 in come i+ui. (b) Interpret those values in the context of the variable definitions and units of measurement. (c) Using the results from part (a), calculate the error (ui) for each of the 10 observations. Interpret these values. (c) Calculate the standard error of the regression (su). Interpret the value. (d) Calculate and interpret the standard error of the ^1 estimate (s^1). Interpret the value. (e) Test the null hypothesis that income has no effect on food expenditures. What do you conclude? [Use a 5% level of significance and critical t-values of 2.306 and +2.306 given d.f. =n2=8.] Question 2: Consider the following data on 10 students: (a) Calculate the values of ^0 and ^1 for the simple linear regression model given by: food i=^0+^1 in come i+ui. (b) Interpret those values in the context of the variable definitions and units of measurement. (c) Using the results from part (a), calculate the error (ui) for each of the 10 observations. Interpret these values. (c) Calculate the standard error of the regression (su). Interpret the value. (d) Calculate and interpret the standard error of the ^1 estimate (s^1). Interpret the value. (e) Test the null hypothesis that income has no effect on food expenditures. What do you conclude? [Use a 5% level of significance and critical t-values of 2.306 and +2.306 given d.f. =n2=8.]

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