2 (40 points) Suppose you are consulting for Macy's online shopping division and they want to learn the effect of a discount (a decrease in the unit price) on money spent in the online site. The data science team ran the following regression: M Si = 0 1Discounti Ui (1) where i {1, ..., 100} are costumers; M Si is the amout of money spent in the online site (measured in US dollars) by customer i; Discounti takes value 1 if the customer i received the discount and 0 otherwise. Let 0 = 10.15 and 1 = 20.25. The standard errors are 1 and 5 respectively. (a) What is the economic interpretation of 1? (2.5 points) (b) Does 0 have a realistic economic interpretation? (2.5 points) (c) Can you reject the hypothesis that the intercept is equal to zero at 95% level? What is the economic interpretation of this test (and of the result)? (5 points) (d) It turns out that if the increase of (the population) average money spent from the discount is larger than 15, then it is profitable to scale the discount and implement it worldwide. Given the value of the OLS estimators, the CEO