Using the data in RDCHEM.RAW, the following equation was obtained by OLS:

(i) At what point does the marginal effect of sales on rdintens become negative?
(ii) Would you keep the quadratic term in the model? Explain.
(iii) Define salesbil as sales measured in billions of dollars: salesbil = sales/1,000. Rewrite the estimated equation with salesbil and salesbil2 as the independent variables. Be sure to report standard errors and the R-squared. [salesbil2 / (1,000)2.]
(iv) For the purpose of reporting the results, which equation do you prefer?

Transcribed Image Text:

rdintens = 2.6134 .00030 sales-.0000000070 sales. 4) 0000000037) (.429) .0001 n 32. R. .1484