Question: In Illustration 4.2 on page 140 of the textbook, a linear regression model was employed to

determine whether the auto insurance premiums ( P ) can be adequately explained differences

in costs across counties in California. Two variables were used to measure costs: (1) the

number of claims per thousand insured vehicles ( N ) , and the average dollar amount of each

bodily injury claim ( C ) .

1. Estimate the following log-linear regression model using the data provided in

Illustration 4.2. (10 pts)

P = aN ^b C ^c

( Copy and paste here your computer printout ).

b. Write the estimated log-linear model of bodily injury claims. (6 pts)

c. Provide a complete analysis (report) of your regression results (Note: Describing and correctly interpreting regression estimation result is equally as important as actually (if not more important ) actually conducting the estimation). Emulating the textbook in this regard may prove to be useful. (35 pts)

d. Compare which model (the linear model in Illustration 4.2 and the log linear model you have estimated here} does a better job overall of explaining the variation in auto premiums ( P )? Why? (5 pts)

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