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HatsforAll, a major producer of hats, hired a research firm to study the demand for its hats. The research firm used 20 years of data
HatsforAll, a major producer of hats, hired a research firm to study the demand for its hats. The research firm used 20 years of data on sales of the company's hats and included two independent variables: the annual average price of the hats and the annual average winter temperature in the company's marketing areas. (The theory behind the temperature variable is that consumers are more likely to buy hats when the temperature is colder.) The estimated coefficient for the price variable is -5.8 with a standard error of 0.8, and the estimated coefficient for the temperature variable is - 20.8 with a standard error of 15.6. Based on the results of survey cards included with the hats, the research firm is confident that higher-Income people buy more hats. In addition to the above two independent variables, the researcher should also include Itis a third explanatory variable to make the estimate more accurate. The coefficient of the temperature variable suggests that it is significant
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