Question

Let x1 represent a quantitative independent variable and x2 represent a dummy variable for a 2-level qualitative independent variable. Which of the following models is the equation that produces two parallel curves, one for each level of your QL variable?

A. E(y) = ?0 + ?1x1 + ?2x12 + ?3x2
B. E(y) = ?0 + ?1x1 + ?3x2
C. E(y) = ?0 + ?x11 + ?3x2 + ?4x1x2
D. E(y) = ?0 + ?1x1 + ?2x12 + ?3x2 + ?4x1x2 + ?5x12x2

Answer 1

D. E(y) = ?0 + ?1x1 + ?2x12 + ?3x2 + ?4x1x2 + ?5x12x2

Explanation:

Quantitative variables are measured in terms of numbers, and figures. Independent variables are those which are reason for change in other variables. Dummy variables are numerical that represents categorical data. The range of these variables is small and they can take on only two quantitative values.