ECO 301: Milestone One

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Use the procedure described to estimate the demand for gasoline using the same steps identified in the example below. Sample answers are based on the “Demand for Jet Fuel” data. Evaluate adjusted R 2 . The adjusted R 2 is 0.778421. It indicates that approximately 78% of the variation in the demand for jet fuel across states is explained by the three independent variables—price, state GDP, and state population. Evaluate each of the independent variables using a t-test. Table 1 provides the results of the t-tests for each of the independent variables. Standa Coefficie rd P-Valu nts Error T-Stat e 45.286 -0.4074 0.6855 Intercept -18.4498 17 1 6 2.7885 0.0496 0.9606 Price 0.138429 82 41 19
0.0391 4.3426 7.45E-0 GDP 0.170079 65 46 5 Populati 0.0017 2.9480 0.0049 on 0.005281 91 36 67 Table 1: T-Test Analysis To assist use the Student t-Value Calculator: http://www.danielsoper.com/statcalc3/calc.aspx?id=10 The degrees of freedom are 47, and the probability is 0.05. The critical value is approximately 2. If the absolute value of the t-statistic is greater than 2, the null hypothesis can be rejected. The P-value results can be used to determine whether to reject each of the following hypotheses. Using the null hypothesis that each of the estimated coefficients is not significantly different from zero, and a 5% probably level (or a 5% probability of obtaining the test statistic as large or larger as the one obtained if the true value is in fact zero), the coefficients for GDP and Population are significant (reject the null hypothesis that the true values are 0), while coefficients for the intercept and price are not significant (do not reject the null hypothesis that the true values of the coefficients are zero). Price:
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Page 5 and 6: Significa df SS MS F nce F Regressi

ECO 301: Milestone One

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