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Question two a. Helen has been commissioned by the Office for National Statistics (ONS) to investigate the relationship between the household weekly expenditure (P550tpr),

 

Question two a. Helen has been commissioned by the Office for National Statistics (ONS) to investigate the relationship between the household weekly expenditure (P550tpr), weekly gross household income (P344pr) and household size (A049r). Helen estimates the following regression model i. 111. lexp = Bo + B, linc + BA049r+ u where lexp = log(P550tpr) and linc - log(P344pr), and u is a random error term. Helen produces the Stata output on page 7 Compute the 95% confidence interval for the slope coefficients B, and B [6 MARKS] Interpret the coefficient [3 marks] Clearly stating the null and alternative hypothesis, test the claim, at 5% level of significance, that the elasticity of expenditure with respect to income is 0.75%. [6 MARKS] b. Consider the standard multiple linear regression model y = Bo + x + + Bkxk + 2

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