Question: The excel file (prices.xls) contains data on three variables, gas price (Y ), natural gas (X), and electricity (Z) of a sample of 10 observations from 1996 to 2005.

1. Find the least-squares regression equation of Y on X and Z without the aid of the
   computer software. [Hint: the regression equation is Y = a + bX + cZ + \(\varepsilon \) .]
2. Find the above least-squares regression equation with the aid of the computer software.
3. Find the coefficient of determination, R2, with the aid of the computer software. What
   does the number in R2 imply?
4. Test the null hypothesis at the 0.05 significance level that the regression coefficient of
   the population regression, b, is 0.0 versus the alternative hypothesis that the regression
   coefficient exceeds 0.0.
5. Test the null hypothesis at the 0.05 significance level that the regression coefficient of
   the population regression, c, is 0.0 versus the alternative hypothesis that the regression
   coefficient exceeds 0.0.
6. Based on the estimated equation \(\hat{Y}=\hat{a}+\hat{b}X+\hat{c}Z\) , determine the estimated value of Y from the given values of X and Z.
7. Estimate the gas price at the natural gas of 9 and the electricity of 8.

Price: $2.99

Solution: The downloadable solution consists of 3 pages
Deliverable: Word Document