Re: Dse 2012 q.39

Posted by shar311 on Jun 25, 2015; 5:38pm
URL: http://discussion-forum.276.s1.nabble.com/Dse-2012-q-39-tp7597760p7598440.html

@sris

can you help me with q32 of 2012 series 1?

An analyst trying to estimate the demand for rice has estimated the following two models
Model 1: D = 50+0.3Y +0.1P +12N; R2 = 0.7.
Where D is the demand for rice per household, Y is income per household, P is the price of rice and N is household size. The standard errors associated with the coefficient Y is 0.1, that associated with P is 0.05, and of N is 3.
Model2:D/N=50+0.2Y/N−0.5P; R2=0.9
where the standard errors of the estimated slope coefficients are 0.1 and 0.2 respectively. Which of the following statements is true?

(a) Model 2 is preferred to Model 1 because it has a higher R2.
(b) Model 1 is preferred to Model 2 because the coefficients are all signif- icant
(c) The two models are not comparable in terms of fit
(d) None of the above