Table 28 Gives Data On Weekly Family Consumption Expenditure Y

Table 2-8 gives data on weekly family consumption expenditure (Y) (in dollars) and weekly family income (X) (in dollars).
HYPOTHETICAL DATA ON WEEKLY CONSUMPTION
EXPENDITURE AND WEEKLY INCOME
Table 2-8 gives data on weekly family consumption expenditure (Y)

a. For each income level, compute the mean consumption expenditure, E(Y | Xi), that is, the conditional expected value.
b. Plot these data in a scatter gram with income on the horizontal axis and consumption expenditure on the vertical axis.
c. Plot the conditional means derived in part (a) in the same scatter gram created in part (b).
d. What can you say about the relationship between Y and X and between mean Y and X?
e. Write down the PRF and the SRF for this example.
f. Is the PRF linear or nonlinear?

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