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2. We are interested in determinants of flights' delay time (DT) (measured in minutes and included in the model in log form) and we
2. We are interested in determinants of flights' delay time (DT) (measured in minutes and included in the model in log form) and we estimated the following model: In DT=B-0.50 International-0.50 In Passengers +0.40 ILnP+O.V.+R International equals to 1 if the airport that the flight departed from is considered an international airport, 0 otherwise (i.e., local airport). Passengers is the number of passengers in a given flight, and this variable is also in the log form. ILNP is an interaction term between International and Ln(Passengers). O.V. is a placeholder for other variables in the model and presume these variables are unrelated to International or Passengers. Finally, R is the residual. (Total of 30 points) a. Interpret the coefficient of In Passengers). (10 points) b. For flights departing from international airports, what is the relationship between the number of passengers that a flight has and its delay time? Hint: first, rewrite the model with the information you are given about the type of airport and make sure you combine the variables if possible. Then, use the new model to talk about the impact of having more passengers on the delay time. (10 points) c. Interpret the coefficient of ILnP. Hint: compare the delay time for flights in the international vs. local airports when the number of passengers increases. Be careful about properly using percent vs. percentage points. (10 points)
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