Econ

EC 4600

Economic Development

Homework Assignment 2

Regression Analysis

This assignment will be discussed on Tuesday, October 14th. Please come to class prepared. I may take up this assignment for extra-credit.

1. What is the linear relationship between Fahrenheit and Celsius. Since the relationship is linear, you only need the following two points to calculate the relationship.

	Fahrenheit	Celsius
Freezing point of water	32	0
Boiling point of water	220	100

Use the slope-intercept form for the equation of a straight-line (y = mx + b), where m is the slope coefficient and b is the vertical intercept.

The equation for the slope is Δy/Δx, where Δy = y1 – y0 and Δx = x1 – x0. Let y be the Fahrenheit temperature, and x be the Celsius temperature.

Note: To calculate the vertical intercept, ue the fact that the vertical intercept is the value of y when x = 0.

2. Now use the data in the Excel file entitled “Fahrenheit Celsius regression illustration.xls” to estimate a regression, where Fahrenheit is the dependent or y variable and Celsius is the independent or x variable.

Use a t-test to test the following hypotheses:

The estimated slope coefficient is equal to the slope calculated in 1 above.

The estimated constant is equal to the vertical intercept calculated in 1 above.