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Consider the following results of a simple regression model of dollar price of unleaded gas (dependent variable) and dollar price of crude oil (independent variable):

Consider the following results of a simple regression model of dollar price of unleaded gas (dependent variable) and dollar price of crude oil (independent variable):

Coefficient t-statistics
Intercept 0.56 28.27
Crude Oil 0.0457 73.34

R-square = 0.87 What will be expected change in the price of unleaded gas if the crude oil price is expected to fall by 5%. The current price of crude oil and unleaded gas are $74 and $3.10 respectively?

(6.25%)

(5.45%)

(4.85%)

(6.89%)

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