Consider a regression study involving a dependent variable y, a quantitative independent variable x1, and a categorical independent variable with three possible levels (level 1, level 2, and level 3).
a. how many dummy variables are required to represent the categorical variable?
b. consider the following regression equation relating x 1 and the categorical variable to y. e(y) = 0 + 1 x 1 + 2 x 2 + 3 x 3
c. enter the values of dummy variables x 2 and x 3 that are used to indicate the three levels of the qualitative variable.

x31 0 or (select 0 or 1) (select0 or 1) (select 0 or 1)
interpret the parameters in your regression equation. 1 is the change in e(y) to a 1 unit change in holding the categorical variable constant.