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The following tax function was estimated using cross-section data for 50 states.

T = -0.221 + 0.142 Inc
p-value (0.087) (<0.0001)

where ‘T' is total taxes paid and ‘Inc' is total income, both measured in billions of
dollars.

A. Interpret the coefficients. Are they in the direction you would expect?

B. Conduct a hypothesis test that the estimated coefficients are different from zero. Use a two-tailed test and a significance level of 05. Show your work.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M948848

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