Here we introduce a dummy variable called SA
This continues the coffee shop example. Here we introduce a dummy variable called SA, which takes the value 1 if the shop is in SA and 0 otherwise. Here is EXCEL regression output to model the revenue of the coffee shops (See the question file)
a) Write out the equations separately for each value of the dummy variable.
b) Sketch the 2 equations above.
c) Interpret the slope on the dummy variable.
d) Test the significance of the coefficient on the dummy variable against a 2 tailed alternative.
e) There is another variable in the dataset for the number of sittings. This takes the value 2 if the shop is open for breakfast and lunch and 1 if the shop is open for lunch only. Is this a dummy variable? Explain your answer.