Homework Answers
Solution:
Denoting delta by d for ease of writing. Then, here d2 is the coefficient of interaction term. Thus, it tells that impact of one independent variable on the dependent variable changes with other independent variable. Here d is the dummy variable taking values 0 and 1, ans x is the continuous variable.
Thus, d2 = 0 will imply that impact of x on y must not change as d changes. In other words, impact of x on y must be same for both groups.
So, correct option is (b) the marginal effect of x on y is equal in both groups.
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