Question

In examining the determinants of income, data were collected regarding the characteristics of 45 adults, and the regression Y = β1 + β2S + β3D + β3 (S*D )+ u was used, where Y is the annual income (in thousands of dollars), S is his/her years of education, and D is a dummy variable = 1 if the adult is female. If you get = 26.3 + 2.94S - 0.76D + 0.34(S ∙ D)

when you run the regression, which of the following is true?

A. A man with 10 years of education will earn an expected income of $39,280.

B. A woman with 10 years of education will earn approximately $1,100 less than men.

C. None of these answers are correct.

D. The average income for males increases $2980 with each additional year of education.

Answer 1