A.     How many dummy variables does this regression use?

B.     What are the values of the dummy variables for urban, sub-urban, and rural? Assume rural is the base territory, with dummy variables equal to zero.

C.    Use Excel or other statistical software to run the regression. What are the values of á, â₁, and â₂? (Fox uses ã₁ and ã₂ instead of â₁ and â₂ for dummy variables.) Explain what each of the coefficients means.

Jacob: Fox uses both ã₁ and ã₂ as well as â₁ and â₂.

Rachel: We do this is the territory number has a quantitative value. But the territory numbers here are just indicators; they have no quantitative meaning. The regression equation is

Frequency = á + â₁ × D₁ + â₂ × D₂

In Fox’s notation, this is            Frequency = á + ã₁ × D₁ + ã₂ × D₂

Can any one please tell me how to use excel to run regression.

[NEAS: Excel help says: “Use the Analysis ToolPak to perform complex data analysis: If you need to develop complex statistical or engineering analyses, you can save steps and time by using the Analysis ToolPak. You provide the data and parameters for each analysis, and the tool uses the appropriate statistical or engineering macro functions to calculate and display the results in an output table. Some tools generate charts in addition to output tables. To use the Analysis ToolPak, click Data Analysis in the Analysis group on the Data tab. If the Data Analysis command is not available, you need to load the Analysis ToolPak add-in program.” The Analysis TookPak is explained (somewhat) in the on-line help facility. The exhibits and graphics produced are the same as those in the Fox textbook.]