A sociologist is studying the relationship between consumption expenditures of families in the United States (Consumption in $), family income (Income in $), and whether or not the family lives in an...

A sociologist is studying the relationship between consumption expenditures of families in the United States (Consumption in $), family income (Income in $), and whether or not the family lives in an urban or rural community (Urban = 1 if urban, 0 otherwise). She collects data on 50 families, a portion of which is shown in the accompanying table.

a. Estimate Consumption =
 +
Income +
Urban +
ε. Use the estimated model to predict the consumption expenditure of urban families with an income of $80,000. What is the corresponding consumption expenditure of rural families?

b. Estimate Consumption =
 +
Income +
Rural +
ε
where the dummy variable Rural equals 1 if rural,

0 otherwise. Use the estimated model to predict the consumption expenditure of urban families with an income of $80,000. What is the corresponding consumption expenditure of rural families?

c. Interpret the results of the two models.