[Solution] Using the data given in Question (1). The following model is used: y=β_0+β_1x_1+β_2x_1^2+u and this is known as the quadratic
Question: Using the data given in Question (1). The following model is used:
\[y={{\beta }_{0}}+{{\beta }_{1}}{{x}_{1}}+{{\beta }_{2}}x_{1}^{2}+u\]and this is known as the quadratic model.
- Obtain the best fitted model and interpret the estimated coefficients.
- Is the sign of \({{\hat{\beta }}_{2}}\) the same as what you expect? Why?
c. What x2 value will maximize (or minimize) predicted y? What is the corresponding predicted y value?
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