( ) …[2.85] is thus the incremental marginal cost associated with occupational schools, in the same way that is the incremental overhead cost associated with them. 2.5.5.0 SUMMARY In this unit, the essentials and applications of the concept of dummy variable estimation was introduced. Byway of illustrative example to the students, an investigation is made which showed that in the application of dummy variables the regression lines for the different groups differ only in the intercept term but have the same slope coefficients. We also discussed two traps that may occur in the application of dummy variable. First, change in reference category, in which a reference variable is created out of the variables inconsideration for analysis. Second, the slope dummyvariables; which considered the slope of the regression line not being the same for each category of the qualitative variables.
