In Household expenditure affected by the familys location? We run the following regression: EXP = 1 + 2SIZE + 3URBAN + u, where URBAN equals to 1 if the household is in urban areas and equal to 0 if the household in rural areas. The regression output is as follows (only the information needed to answer the questions is reported): .reg EXP SIZE URBAN Source | SS df MS ---------------+-------------------------------------------------------------- Model | 161 Residual | 2312 ---------------+-------------------------------------------------------------- Total | 2473 ----------------------------------------------------------------------------------------------------------------- Exp | Coef. Std. Err. t P>|t| [95% Conf. Interval ] ------------------+---------------------------------------------------------------------------------------------- SIZE | 0.98 0.05 URBAN | 1.31 0.35 _cons | 3.09 0.45 ------------------------------------------------------------------------------------------------------------------- 1. Interpret the coefficient of URBAN. 2. How would you test whether the model has any explanatory power? List the detailed steps required to perform the relevant test and conclude (use 5% significance level). 3. What would be your predication for the total household expenditure of a rural household if there were 4 people in the household? 4. Suppose you want to add a square of SIZE into the regression, because the marginal expenditure of an additional person might be smaller due to economics of scale. What do you expect to happen to the coefficient of SIZE? Why? 5. Does household expenditure differ by location? There are two tests that you can perform to answer this question. Please list the detailed steps of each test and conclude (use 5% significance level).