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polet [3.4K]
3 years ago
9

g Consider a multiple regression model: y = ????0 + ????1x1 + ????2x2 + ????. Which of the following is NOT the correct expressi

on of the interpretation of the slope parameter ????1? (a) The partial effect of x1 on y (b) The effect of x1 on y holding x2 constant (c) The Ceteris Paribus effect of x1 on y (d) All of the above are correct interpretation.
Mathematics
1 answer:
artcher [175]3 years ago
3 0

Completed Equation of Question:

y = \beta_{o}\;+\;\beta_{1}x_1\;+\;\beta_{2}x_2\;+\mu

Answer:

Option (d): All of the above are correct interpretation.

Explanation:

In the given equation:

y = \beta_{o}\;+\;\beta_{1}x_1\;+\;\beta_{2}x_2\;+\mu

It would be inaccurate to state that: <em>For every unit change in x1, y changes by </em>\beta_1<em> units</em>.

The correct statement would be: <em>For every unit change in x1, y changes by </em>\beta_1<em> units, keeping </em>x_2 constant. This is the same as taking partial derivative or applying <em>Ceteris Paribus</em><em> </em>effect<em> </em>(which means keeping all other variables equal which in this case is<em> </em>x_2. Hence, the slope parameter is correctly interpreted by all options.

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