Variable

Price- Tire price in dollars per tire.

Independent variables:

Variable

-Diameter Inside diameter of the tire in inches.

-Ratio Ratio of height of tire sidewall to width of tread, in percent.

-Terrain Equals 1 if the tire is for all Terrain vehicle, 0 otherwise.

-Weight Weight of tire in pounds.

-Tread Tread width of tire in inches.

-OWL Equals 1 if raised Outside White Lettering, 0 otherwise.

-Volume The number of tires (in thousands) of this type purchased by ABC in that year.

-RATING Indicator variable denoting the speed safety classification of a tire. For simplicity we will consider only two safety classifications ('normal highway driving' and 'high speed driving'). This variable (RATING) equals 1 if rated for normal highway driving, 0 otherwise (i.e. high speed driving).

-WW Indicator variable denoting the tire color (tires are either 'black wall' or 'white wall'). This variable equals 1 if a 'white wall' tire, 0 otherwise (i.e. a 'black wall' tire).

Estimate the following model, used by ABC.

₀ + ₁ DIAMETER + ₂RATIO + ₃TERRAIN + ₄WEIGHT + ₅TREAD + ₆OWL + ₇VOLUME + ₈RATING + ₉WW

Make sure to use the "LN" of price in your regression, NOT the price column!!!!

(a) Report and interpret the coefficient of WEIGHT.

(b) The coefficient of Diameter is larger than the coefficient of Weight. Does this mean that Diameter is a more important variable than Weight? Briefly explain the answer.

(c) What is the elasticity of Price with respect to Weight after controlling for all other variables used in the regression?

PRICE	Diameter	Ratio	Terrain	Weight	Tread	OWL	Volume	RATING	WW
30.39	16	60	0	24.6	225	0	143	1	0
25.9	15	60	0	21.6	205	0	473	1	0
35.13	16	60	0	24.2	215	0	49	0	0
42.93	17	50	0	26.5	235	0	120	0	0
42.94	16	60	0	24	215	0	27	0	1
30.39	15	65	0	21.5	205	0	21	0	0
19.94	14	70	0	17	185	0	208	1	0
33.13	16	60	0	23.8	215	0	62	0	0
22.93	15	65	0	20	205	0	2028	1	0
28.11	15	65	0	20	205	0	10	0	0
25.31	15	70	0	20.8	215	0	396	1	0
24.93	15	70	0	21.5	205	0	158	1	0
26.09	15	70	0	22.5	215	0	253	1	0
44.04	16	60	0	27.2	225	0	288	0	0
33.77	16	60	0	24.3	225	0	98	1	0
42.75	16	60	0	24.6	225	0	45	0	0
25.49	15	70	0	22.1	215	0	591	1	0
28.89	15	70	0	24.8	215	0	13	0	0
20.02	14	70	0	16.5	185	0	130	1	0
25.82	15	60	0	20.4	205	0	82	1	0
20.74	14	65	0	16.4	185	0	254	1	0
28.53	15	60	0	17.8	185	0	257	1	0
23.7	14	65	0	18.3	185	0	127	1	0
43.37	16	55	0	23.6	225	0	16	0	0
42.75	16	60	0	24.6	225	0	16	0	0
24.78	15	65	0	20	205	0	297	1	0
47.34	17	45	0	24.1	245	0	120	0	0
33.77	16	60	0	24.2	225	0	143	1	0
33.45	16	60	0	25.1	225	0	548	1	1
31.8	16	60	0	24.8	225	0	114	1	0
28.91	15	65	0	19.9	215	0	16	0	0
24.33	14	65	0	18.7	195	0	99	1	0
35.51	16	50	0	23.5	215	0	20	0	0
21.54	14	65	0	16.2	185	0	1149	1	0
35.51	16	60	0	25.1	225	0	112	1	0
40.88	16	60	0	24.2	225	0	5	0	0
35.1	16	55	0	23.6	225	0	117	0	0
50.52	17	45	0	25.1	245	0	50	0	0
31.25	16	60	0	24.3	225	0	266	1	0
33.45	16	60	0	25.1	225	0	60	1	1
37.95	16	70	0	29.4	225	0	15	1	0
35.92	16	60	0	28.8	235	0	60	1	0
34.14	15	75	1	28.2	235	1	1879	1	0
41.37	16	70	1	32	255	1	560	1	0
42.81	16	70	0	32.7	255	0	33	0	0
24.92	15	70	0	24.1	225	0	903	1	0
31.05	16	70	0	27.8	235	0	338	1	0
34.18	16	70	0	27.8	235	1	81	1	0
28.69	15	70	0	24.1	225	1	406	1	0
21.89	14	75	0	19.1	205	0	224	1	0
41.73	15	75	1	35.4	265	1	51	1	0
28.73	15	75	1	25.1	215	1	33	1	0
36.16	16	70	1	27.7	235	1	289	1	0
46.67	17	70	1	38.2	265	1	611	1	0
39.22	16	70	1	34.2	255	1	540	1	0
36.19	16	75	0	36	245	0	22	1	0
48.49	17	75	1	40.8	255	1	131	1	0
40.66	16	75	0	36	245	1	62	1	0
38.01	16	70	0	34.7	255	1	117	1	0
34.07	16	70	0	34.3	255	0	142	1	0
28	15	75	0	27.1	225	0	30	1	0