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PROBLEM

1. Assume you have noted the following prices for books and the number of pages that each book
contains.

Book Pages (x) Price (y)


A 500 $7.00
B 700 7.50
C 750 9.00
D 590 6.50
E 540 7.50
F 650 7.00
G 480 4.50

a. Develop a least-squares estimated regression line.


b. Compute the coefficient of determination and explain its meaning.
c. Compute the correlation coefficient between the price and the number of pages. Test to see if x
and y are related. Use  = 0.10.

ANS:
a. = 1.0416 + 0.0099x
b. r 2 = .5629; the regression equation has accounted for 56.29% of the total sum of squares
c. rxy = 0.75
t = 2.54 > 2.015 (df = 5); p-value is between .05 and 0.1; (Excel’s results: p-value of 0.052);
reject Ho, and conclude x and y are related

PTS: 1 TOP: Regression Analysis

2. Assume you have noted the following prices for books and the number of pages that each book
contains.

Book Pages (x) Price (y)


A 500 $7.00
B 700 7.50
C 750 9.00
D 590 6.50
E 540 7.50
F 650 7.00
G 480 4.50

a. Perform an F test and determine if the price and the number of pages of the books are related.
Let  = 0.01.
b. Perform a t test and determine if the price and the number of pages of the books are related. Let
 = 0.01.
c. Develop a 90% confidence interval for estimating the average price of books that contain 800
pages.
d. Develop a 90% confidence interval to estimate the price of a specific book that has 800 pages.

ANS:
a. F = 6.439 < 16.26; p-value is between 0.1 and 0.2
(Excel’s result: p-value = .052); do not reject Ho; conclude x and y are not related
b. t = 2.5376 < 4.032; p-value is between 0.1 and 0.2.
(Excel’s result: p-value = .052); do not reject Ho; conclude x and y are not related
c. $7.29 to $10.63 (rounded)
d. $5.62 to $12.31 (rounded)

PTS: 1 TOP: Regression Analysis

3. The following data represent the number of flash drives sold per day at a local computer shop and their
prices.

Price (x) Units Sold (y)


$34 3
36 4
32 6
35 5
30 9
38 2
40 1

a. Develop a least-squares regression line and explain what the slope of the line indicates.
b. Compute the coefficient of determination and comment on the strength of relationship between
x and y.
c. Compute the sample correlation coefficient between the price and the number of flash drives
sold. Use = 0.01 to test the relationship between x and y.

ANS:
a. = 29.7857 - 0.7286x
The slope indicates that as the price goes up by $1, the number of units sold goes down by
0.7286 units.
b. r 2 = .8556; the regression equation has accounted for 85.56% of the total sum of squares
c. rxy = -0.92
t = -5.44 < -4.032 (df = 5); p-value  .01; (Excel’s result: p-value = .0028); reject Ho, and
conclude x and y are related

PTS: 1 TOP: Regression Analysis

4. The following data represent the number of flash drives sold per day at a local computer shop and their
prices.

Price (x) Units Sold (y)


$34 3
36 4
32 6
35 5
30 9
38 2
40 1

a. Perform an F test and determine if the price and the number of flash drives sold are related. Let
 = 0.01.
b. Perform a t test and determine if the price and the number of flash drives sold are related. Let 
= 0.01.

ANS:
a. F = 29.624 > 16.26; p-value  .01; (Excel’s result: p-value = .0028); reject Ho, x and y are
related
b. t = -5.4428 < -4.032; p-value  .01; (Excel’s result: p-value = .0028); reject Ho, x and y are
related

PTS: 1 TOP: Regression Analysis

5. Shown below is a portion of an Excel output for regression analysis relating Y (dependent variable)
and X (independent variable).

ANOVA
df SS
Regression 1 110
Residual 8 74
Total 9 184

Coefficients Standard Error


Intercept 39.222 5.943
x -0.5556 0.1611

a. What has been the sample size for the above?


b. Perform a t test and determine whether or not X and Y are related. Let  = 0.05.
c. Perform an F test and determine whether or not X and Y are related. Let  = 0.05.
d. Compute the coefficient of determination.
e. Interpret the meaning of the value of the coefficient of determination that you found in d. Be
very specific.

ANS:
a through d

Summary Output

Regression Statistics
Multiple R 0.7732
R Square 0.5978
Adjusted R Square 0.5476
Standard Error 3.0414
Observations 10

ANOVA
df SS MS F Significance F
Regression 1 110 110 11.892 0.009
Residual 8 74 9.25
Total 9 184

Coefficients Standard Error t Stat P-value


Intercept 39.222 5.942 6.600 0.000
x -0.556 0.161 -3.448 0.009

e. 59.783% of the variability in Y is explained by the variability in X.

PTS: 1 TOP: Regression Analysis


6. Shown below is a portion of a computer output for regression analysis relating Y (dependent variable)
and X (independent variable).

ANOVA
df SS
Regression 1 24.011
Residual 8 67.989

Coefficients Standard Error


Intercept 11.065 2.043
x -0.511 0.304

a. What has been the sample size for the above?


b. Perform a t test and determine whether or not X and Y are related. Let  = 0.05.
c. Perform an F test and determine whether or not X and Y are related. Let  = 0.05.
d. Compute the coefficient of determination.
e. Interpret the meaning of the value of the coefficient of determination that you found in d. Be
very specific.

ANS:
a through d

Summary Output

Regression Statistics
Multiple R 0.511
R Square 0.261
Adjusted R Square 0.169
Standard Error 2.915
Observations 10

ANOVA
df SS MS F Significance F
Regression 1 24.011 24.011 2.825 0.131
Residual 8 67.989 8.499
Total 9 92

Coefficients Standard Error t Stat P-value


Intercept 11.065 2.043 5.415 0.001
x -0.511 0.304 -1.681 0.131

e. 26.1% of the variability in Y is explained by the variability in X.

PTS: 1 TOP: Regression Analysis

7. Part of an Excel output relating X (independent variable) and Y (dependent variable) is shown below.
Fill in all the blanks marked with "?".

Summary Output

Regression Statistics
Multiple R 0.1347
R Square ?
Adjusted R Square ?
Standard Error 3.3838
Observations ?

ANOVA
df SS MS F Significance F
Regression ? 2.7500 ? ? 0.632
Residual ? ? 11.45
Total 14 ?

Coefficients Standard Error t Stat P-value


Intercept 8.6 2.2197 ? 0.0019
x 0.25 0.5101 ? 0.632

ANS:
Summary Output

Regression Statistics
Multiple R 0.1347
R Square 0.0181
Adjusted R Square -0.0574
Standard Error 3.384
Observations 15

ANOVA
df SS MS F Significance F
Regression 1 2.750 2.75 0.2402 0.6322
Residual 13 148.850 11.45
Total 14 151.600

Coefficients Standard Error t Stat p-value


Intercept 8.6 2.2197 3.8744 0.0019
x 0.25 0.5101 0.4901 0.6322

PTS: 1 TOP: Regression Analysis

8. Shown below is a portion of a computer output for a regression analysis relating Y (dependent
variable) and X (independent variable).

ANOVA
df SS
Regression 1 115.064
Residual 13 82.936
Total

Coefficients Standard Error


Intercept 15.532 1.457
x -1.106 0.261

a. Perform a t test using the p-value approach and determine whether or not Y and X are related.
Let  = 0.05.
b. Using the p-value approach, perform an F test and determine whether or not X and Y are
related.
c. Compute the coefficient of determination and fully interpret its meaning. Be very specific.

ANS:
a and b

Summary Output

Regression Statistics
Multiple R 0.7623
R Square 0.5811
Adjusted R Square 0.5489
Standard Error 2.5258
Observations 15

ANOVA
df SS MS F Significance F
Regression 1 115.064 115.064 18.036 0.001
Residual 13 82.936 6.380
Total 14 198

Coefficients Standard Error t Stat P-value


Intercept 15.532 1.457 10.662 0.000
x -1.106 0.261 -4.247 0.001

c. 58.11% of the variability in Y is explained by the variability in X.

PTS: 1 TOP: Regression Analysis

9. Part of an Excel output relating X (independent variable) and Y (dependent variable) is shown below.
Fill in all the blanks marked with "?".

Summary Output

Regression Statistics
Multiple R ?
R Square 0.5149
Adjusted R Square ?
Standard Error 7.3413
Observations 11

ANOVA
df SS MS F Significance F
Regression ? ? ? ? 0.0129
Residual ? ? ?
Total ? 1000

Coefficients Standard Error t Stat P-value


Intercept ? 29.4818 3.7946 0.0043
x ? 0.7000 -3.0911 0.0129

ANS:
Summary Output
Regression Statistics
Multiple R 0.7176
R Square 0.5149
Adjusted R Square 0.4611
Standard Error 7.3413
Observations 11

ANOVA
df SS MS F Significance F
Regression 1 514.9455 514.9455 9.5546 0.0129
Residual 9 485.0545 53.8949
Total 10 1000.0000

Coefficients Standard Error t Stat P-value


Intercept 111.8727 29.4818 3.7946 0.0043
x -2.1636 0.7000 -3.0911 0.0129

PTS: 1 TOP: Regression Analysis

10. Shown below is a portion of a computer output for a regression analysis relating Y (demand) and X
(unit price).

ANOVA
df SS
Regression 1 5048.818
Residual 46 3132.661
Total 47 8181.479

Coefficients Standard Error


Intercept 80.390 3.102
X -2.137 0.248

a. Perform a t test and determine whether or not demand and unit price are related. Let  = 0.05.
b. Perform an F test and determine whether or not demand and unit price are related. Let  =
0.05.
c. Compute the coefficient of determination and fully interpret its meaning. Be very specific.
d. Compute the coefficient of correlation and explain the relationship between demand and unit
price.

ANS:
a and b

Summary Output

Regression Statistics
Multiple R 0.786
R Square 0.617
Adjusted R Square 0.609
Standard Error 8.252
Observations 48

ANOVA
df SS MS F Significance F
Regression 1 5048.818 5048.818 74.137 0.000
Residual 46 3132.661 68.101
Total 47 8181.479

Coefficients Standard Error t Stat P-value


Intercept 80.390 3.102 25.916 0.000
X -2.137 0.248 -8.610 0.000

c. R2 = 0.617; 61.7% of the variability in demand is explained by the variability in price.


d. R = -0.786; since the slope is negative, the coefficient of correlation is also negative, indicating
that as unit price increases demand decreases.

PTS: 1 TOP: Regression Analysis

11. Shown below is a portion of a computer output for a regression analysis relating supply (Y in
thousands of units) and unit price (X in thousands of dollars).

ANOVA
df SS
Regression 1 354.689
Residual 39 7035.262

Coefficients Standard Error


Intercept 54.076 2.358
X 0.029 0.021

a. What has been the sample size for this problem?


b. Perform a t test and determine whether or not supply and unit price are related. Let  = 0.05.
c. Perform and F test and determine whether or not supply and unit price are related. Let  =
0.05.
d. Compute the coefficient of determination and fully interpret its meaning. Be very specific.
e. Compute the coefficient of correlation and explain the relationship between supply and unit
price.
f. Predict the supply (in units) when the unit price is $50,000.

ANS:
a through c

Regression Statistics
Multiple R 0.219
R Square 0.048
Adjusted R Square 0.024
Standard Error 13.431
Observations 41

ANOVA
df SS MS F Significance F
Regression 1 354.689 354.689 1.966 0.169
Residual 39 7035.262 180.391
Total 40 7389.951

Coefficients Standard Error t Stat P-value


Intercept 54.076 2.358 22.938 0.000
X 0.029 0.021 1.402 0.169

d. R2 = 0.048; 4.8% of the variability in supply is explained by the variability in price.


e. R = 0.219; since the slope is positive, as unit price increases so does supply.
f. supply = 54.076 + .029(50) = 55.526 (55,526 units)

PTS: 1 TOP: Regression Analysis

12. Given below are four observations collected in a regression study on two variables x (independent
variable) and y (dependent variable).

x y
2 4
6 7
9 8
9 9

a. Develop the least squares estimated regression equation.


b. At 95% confidence, perform a t test and determine whether or not the slope is significantly
different from zero.
c. Perform an F test to determine whether or not the model is significant. Let  = 0.05.
d. Compute the coefficient of determination.

ANS:
Regression Statistics
Multiple R 0.977
R Square 0.955
Adjusted R Square 0.932
Standard Error 0.564
Observations 4

ANOVA
df SS MS F Significance F
Regression 1 13.364 13.364 42.000 0.023
Residual 2 0.636 0.318
Total 3 14

Coefficients Standard Error t Stat P-value


Intercept 2.864 0.698 4.104 0.055
X 0.636 0.098 6.481 0.023

a. = 2.864 + 0.636x
b. p-value < .05; reject Ho
c. p-value < .05; reject Ho
d. 0.955

PTS: 1 TOP: Regression Analysis

13. Given below are five observations collected in a regression study on two variables, x (independent
variable) and y (dependent variable).

x y
2 4
3 4
4 3
5 2
6 1

a. Develop the least squares estimated regression equation.


b. At 95% confidence, perform a t test and determine whether or not the slope is significantly
different from zero.
c. Perform an F test to determine whether or not the model is significant. Let  = 0.05.
d. Compute the coefficient of determination.
e. Compute the coefficient of correlation.

ANS:
Regression Statistics
Multiple R 0.970
R Square 0.941
Adjusted R Square 0.922
Standard Error 0.365
Observations 5

ANOVA
df SS MS F Significance F
Regression 1 6.4 6.400 48.000 0.006
Residual 3 0.4 0.133
Total 4 6.8

Coefficients Standard Error t Stat P-value


Intercept 6.000 0.490 12.247 0.001
X -0.800 0.115 -6.928 0.006

a. = 6 - 0.8 x
b. p-value < .05; reject Ho
c. p-value < .05; reject Ho
d. 0.941
e. -0.970

PTS: 1 TOP: Regression Analysis

14. Below you are given a partial computer output based on a sample of 8 observations, relating an
independent variable (x) and a dependent variable (y).

Coefficient Standard Error


Intercept 13.251 10.77
X 0.803 0.385

Analysis of Variance

SOURCE SS
Regression
Error (Residual) 41.674
Total 71.875

a. Develop the estimated regression line.


b. At  = 0.05, test for the significance of the slope.
c. At  = 0.05, perform an F test.
d. Determine the coefficient of determination.

ANS:
a. = 13.251 + 0.803x
b. t = 2.086; p-value is between .05 and .1 (critical t = 2.447); do not reject Ho
c. F = 4.348; p-value is between .05 and .1 (critical F = 5.99); do not reject Ho
d. 0.42

PTS: 1 TOP: Regression Analysis

15. Below you are given a partial computer output based on a sample of 8 observations, relating an
independent variable (x) and a dependent variable (y).

Coefficient Standard Error


Intercept -9.462 7.032
x 0.769 0.184

Analysis of Variance

SOURCE SS
Regression 400
Error (Residual) 138

a. Develop the estimated regression line.


b. At  = 0.05, test for the significance of the slope.
c. At  = 0.05, perform an F test.
d. Determine the coefficient of determination.

ANS:
a. = -9.462 + 0.769x
b. t = 4.17; p-value (actual p-value using Excel = 0.0059) < .05; reject Ho
c. F = 17.39; p-value (actual p-value using Excel = 0.0059) < .05; reject Ho
d. 0.743

PTS: 1 TOP: Regression Analysis

16. The following data represent a company's yearly sales volume and its advertising expenditure over a
period of 8 years.

(Y) (X)
Sales in Advertising
Millions of Dollars in ($10,000)
15 32
16 33
18 35
17 34
16 36
19 37
19 39
24 42
a. Develop a scatter diagram of sales versus advertising and explain what it shows regarding the
relationship between sales and advertising.
b. Use the method of least squares to compute an estimated regression line between sales and
advertising.
c. If the company's advertising expenditure is $400,000, what are the predicted sales? Give the
answer in dollars.
d. What does the slope of the estimated regression line indicate?
e. Compute the coefficient of determination and fully interpret its meaning.
f. Use the F test to determine whether or not the regression model is significant at  = 0.05.
g. Use the t test to determine whether the slope of the regression model is significant at  = 0.05.
h. Develop a 95% confidence interval for predicting the average sales for the years when
$400,000 was spent on advertising.
i. Compute the correlation coefficient.

ANS:

a.

The scatter diagram shows a positive relation between sales and advertising.

b. = -10.42 + 0.7895X
c. $21,160,000
d. As advertising is increased by $10,000, sales are expected to increase by $789,500.
e. 0.8459; 84.59% of variation in sales is explained by variation in advertising
f. F = 32.93; p-value (actual p-value using Excel = 0.0012) < .05; reject Ho; it is significant
(critical F = 5.99)
g. t = 5.74; p-value (actual p-value using Excel = 0.0012) < .05; reject Ho; significant (critical t =
2.447)
h. $19,460,000 to $22,860,000
i. 0.9197

PTS: 1 TOP: Regression Analysis

17. Given below are five observations collected in a regression study on two variables x (independent
variable) and y (dependent variable).

x y
10 7
20 5
30 4
40 2
50 1

a. Develop the least squares estimated regression equation


b. At 95% confidence, perform a t test and determine whether or not the slope is significantly
different from zero.
c. Perform an F test to determine whether or not the model is significant. Let  = 0.05.
d. Compute the coefficient of determination.
e. Compute the coefficient of correlation.

ANS:
a. = 8.3 - 0.15x
b. t = -15; p-value (actual p-value using Excel = 0.0001) < .05; reject Ho (critical t = 3.18)
c. F = 225; p-value (actual p-value using Excel = 0.0001) < .05; reject Ho (critical F = 10.13)
d. 0.9868
e. 0.9934

PTS: 1 TOP: Regression Analysis

18. Below you are given a partial computer output based on a sample of 14 observations, relating an
independent variable (x) and a dependent variable (y).

Predictor Coefficient Standard Error


Constant 6.428 1.202
X 0.470 0.035

Analysis of Variance

SOURCE SS
Regression 958.584
Error (Residual)
Total 1021.429

a. Develop the estimated regression line.


b. At  = 0.05, test for the significance of the slope.
c. At  = 0.05, perform an F test.
d. Determine the coefficient of determination.
e. Determine the coefficient of correlation.

ANS:
a. = 6.428 + 0.47x
b. t = 13.529; p-value (actual p-value using Excel = 0.0000) < .05; reject Ho (critical t = 2.179)
c. F = 183.04; p-value (actual p-value using Excel = 0.0000) < .05; reject Ho (critical F = 4.75)
d. 0.938
e. 0.968

PTS: 1 TOP: Regression Analysis

19. Below you are given a partial computer output based on a sample of 21 observations, relating an
independent variable (x) and a dependent variable (y).

Predictor Coefficient Standard Error


Constant 30.139 1.181
X -0.252 0.022

Analysis of Variance

SOURCE SS
Regression 1,759.481
Error 259.186

a. Develop the estimated regression line.


b. At  = 0.05, test for the significance of the slope.
c. At  = 0.05, perform an F test.
d. Determine the coefficient of determination.
e. Determine the coefficient of correlation.

ANS:
a. = 30.139 - 0.252X
b. t = -11.357; p-value (almost zero) <  = .05; reject Ho (critical t = 2.093)
c. F = 128.982; p-value (almost zero) <  = .05; reject Ho (critical F = 4.38)
d. 0.872
e. -0.934

PTS: 1 TOP: Regression Analysis

20. An automobile dealer wants to see if there is a relationship between monthly sales and the interest rate.
A random sample of 4 months was taken. The results of the sample are presented below. The estimated
least squares regression equation is

= 75.061 - 6.254X

Y X
Monthly Sales Interest Rate (In Percent)
22 9.2
20 7.6
10 10.4
45 5.3

a. Obtain a measure of how well the estimated regression line fits the data.
b. You want to test to see if there is a significant relationship between the interest rate and
monthly sales at the 1% level of significance. State the null and alternative hypotheses.
c. At 99% confidence, test the hypotheses.
d. Construct a 99% confidence interval for the average monthly sales for all months with a 10%
interest rate.
e. Construct a 99% confidence interval for the monthly sales of one month with a 10% interest
rate.

ANS:
a. R2 = 0.8687
b. H0: 1 = 0
Ha: 1 0
c. test statistic t = -3.64; p-value is between .05 and .10 (critical t = 9.925); do not reject H0
d. -33.151 to 58.199; therefore, 0 to 58.199
e. -67.068 to 92.116; therefore, 0 to 92.116
PTS: 1 TOP: Regression Analysis

21. Jason believes that the sales of coffee at his coffee shop depend upon the weather. He has taken a
sample of 6 days. Below you are given the results of the sample.

Cups of Coffee Sold Temperature


350 50
200 60
210 70
100 80
60 90
40 100

a. Which variable is the dependent variable?


b. Compute the least squares estimated line.
c. Compute the correlation coefficient between temperature and the sales of coffee.
d. Is there a significant relationship between the sales of coffee and temperature? Use a .05 level
of significance. Be sure to state the null and alternative hypotheses.
e. Predict sales of a 90 degree day.

ANS:
a. Cups of coffee sold
b. = 605.714 - 5.943X
c. 0.95197
d. H0: 1 = 0
Ha: 1 0
t = -6.218; p-value (actual p-value using Excel = 0.0034) <  = .05; reject Ho (critical t =
2.776)
e. 70.8 or 71 cups

PTS: 1 TOP: Regression Analysis

22. Researchers have collected data on the hours of television watched in a day and the age of a person.
You are given the data below.

Hours of Television Age


1 45
3 30
4 22
3 25
6 5

a. Determine which variable is the dependent variable.


b. Compute the least squares estimated line.
c. Is there a significant relationship between the two variables? Use a .05 level of significance. Be
sure to state the null and alternative hypotheses.
d. Compute the coefficient of determination. How would you interpret this value?

ANS:
a. Hours of Television
b. = 6.564 - 0.1246X
c. H0: 1 = 0
Ha: 1 0
t = -12.018; p-value (actual p-value using Excel = 0.0002) <  = .05; reject H0 (critical t =
3.18)
d. 0.98 (rounded); 98 % of variation in hours of watching television is explained by variation in
age.

PTS: 1 TOP: Regression Analysis

23. Given below are seven observations collected in a regression study on two variables, X (independent
variable) and Y (dependent variable).

X Y
2 12
3 9
6 8
7 7
8 6
7 5
9 2

a. Develop the least squares estimated regression equation.


b. At 95% confidence, perform a t test and determine whether or not the slope is significantly
different from zero.
c. Perform an F test to determine whether or not the model is significant. Let  = 0.05.
d. Compute the coefficient of determination.

ANS:
a. = 13.75 -1.125X
b. t = -5.196; p-value (actual p-value using Excel = 0.0001) <  = .05; reject Ho (critical t =
2.571)
c. F = 27; p-value (actual p-value using Excel = 0.0001) <  = .05; reject Ho (critical F = 6.61)
d. 0.844

PTS: 1 TOP: Regression Analysis

24. The owner of a retail store randomly selected the following weekly data on profits and advertising
cost.

Week Advertising Cost ($) Profit ($)


1 0 200
2 50 270
3 250 420
4 150 300
5 125 325

a. Write down the appropriate linear relationship between advertising cost and profits. Which is
the dependent variable? Which is the independent variable?
b. Calculate the least squares estimated regression line.
c. Predict the profits for a week when $200 is spent on advertising.
d. At 95% confidence, test to determine if the relationship between advertising costs and profits is
statistically significant.
e. Calculate the coefficient of determination.
ANS:
a. E(Y) = 0 + 1X, where Y is profit and X is advertising cost
b. = 210.0676 + 0.80811X
c. $371.69
d. t = 6.496; p-value (actual p-value using Excel = 0.0013) <  = .05; reject Ho; relationship is
significant (critical t = 3.182)
e. 0.9336

PTS: 1 TOP: Regression Analysis

25. \The owner of a bakery wants to analyze the relationship between the expenditure of a customer and
the customer's income. A sample of 5 customers is taken and the following information was obtained.

Y X
Expenditure Income (In Thousands)
.45 20
10.75 19
5.40 22
7.80 25
5.60 14

The least squares estimated line is = 4.348 + 0.0826 X.


a. Obtain a measure of how well the estimated regression line fits the data.
b. You want to test to see if there is a significant relationship between expenditure and income at
the 5% level of significance. Be sure to state the null and alternative hypotheses.
c. Construct a 95% confidence interval estimate for the average expenditure for all customers
with an income of $20,000.
d. Construct a 95% confidence interval estimate for the expenditure of one customer whose
income is $20,000.

ANS:
a. R2 = 0.0079
b. H0: 1 = 0
Ha: 1 0
t = 0.154; p-value (actual p-value using Excel = 0.8871) >  = .05; do not reject H0; (critical t =
3.182)
c. 0.185 to 12.185
d. -9.151 to 21.151

PTS: 1 TOP: Regression Analysis

26. Below you are given information on annual income and years of college education.

Income (In Thousands) Years of College


28 0
40 3
36 2
28 1
48 4

a. Develop the least squares regression equation.


b. Estimate the yearly income of an individual with 6 years of college education.
c. Compute the coefficient of determination.
d. Use a t test to determine whether the slope is significantly different from zero. Let  = 0.05.
e. At 95% confidence, perform an F test and determine whether or not the model is significant.

ANS:
a. = 25.6 + 5.2X
b. $56,800
c. 0.939
d. t = 6.789; p-value (actual p-value using Excel = 0.0008) <  = .05; reject Ho; significant
(critical t = 3.182
e. F = 46.091; p-value (actual p-value using Excel = 0.0008) <  = .05; reject Ho; significant
(critical F = 10.13)

PTS: 1 TOP: Regression Analysis

27. Below you are given information on a woman's age and her annual expenditure on purchase of books.

Age Annual Expenditure ($)


18 210
22 180
21 220
28 280

a. Develop the least squares regression equation.


b. Compute the coefficient of determination.
c. Use a t test to determine whether the slope is significantly different from zero. Let  = 0.05.
d. At 95% confidence, perform an F test and determine whether or not the model is significant.

ANS:
a. = 54.834 + 7.536X
2
b. R = 0.568
c. t = 1.621; p-value (actual p-value using Excel = 0.2464) >  = .05; do not reject Ho; not
significant (critical t = 4.303)
d. F = 2.628; p-value (actual p-value using Excel = 0.2464) >  = .05; do not reject Ho; not
significant (critical F = 18.51)

PTS: 1 TOP: Regression Analysis

28. The following sample data contains the number of years of college and the current annual salary for a
random sample of heavy equipment salespeople.

Annual Income
Years of College (In Thousands)
2 20
2 23
3 25
4 26
3 28
1 29
4 27
3 30
4 33
4 35
a. Which variable is the dependent variable? Which is the independent variable?
b. Determine the least squares estimated regression line.
c. Predict the annual income of a salesperson with one year of college.
d. Test if the relationship between years of college and income is statistically significant at the .05
level of significance.
e. Calculate the coefficient of determination.
f. Calculate the sample correlation coefficient between income and years of college. Interpret the
value you obtain.

ANS:
a. Y (dependent variable) is annual income and X (independent variable) is years of college
b. = 21.6 + 2X
c. $23,600
d. The relationship is not statistically significant since t = 1.51; p-value (actual p-value using
Excel = 0.1696) >  = .05 (critical t = 2.306)
e. 0.222
f. 0.471; there is a positive correlation between years of college and annual income

PTS: 1 TOP: Regression Analysis

29. The following data shows the yearly income (in $1,000) and age of a sample of seven individuals.

Income (in $1,000) Age


20 18
24 20
24 23
25 34
26 24
27 27
34 27

a. Develop the least squares regression equation.


b. Estimate the yearly income of a 30-year-old individual.
c. Compute the coefficient of determination.
d. Use a t test to determine whether the slope is significantly different from zero. Let  = 0.05.
e. At 95% confidence, perform an F test and determine whether or not the model is significant.

ANS:
a. = 16.204 + 0.3848X
b. $27,748
c. 0.2266
d. t = 1.21; p-value (actual p-value using Excel = 0.2803) >  = .05; not significant (critical t =
2.571)
e. F = 1.46; p-value (actual p-value using Excel = 0.2803) >  = .05; not significant (critical F =
6.61)

PTS: 1 TOP: Regression Analysis

30. The following data show the results of an aptitude test (Y) and the grade point average of 10 students.

Aptitude Test
Score (Y) GPA (X)
26 1.8
31 2.3
28 2.6
30 2.4
34 2.8
38 3.0
41 3.4
44 3.2
40 3.6
43 3.8

a. Develop a least squares estimated regression line.


b. Compute the coefficient of determination and comment on the strength of the regression
relationship.
c. Is the slope significant? Use a t test and let  = 0.05.
d. At 95% confidence, test to determine if the model is significant (i.e., perform an F test).

ANS:
a. = 8.171 + 9.4564X
b. 0.83; there is a fairly strong relationship
c. t = 6.25; p-value (actual p-value using Excel = 0.0002) <  =.05; it is significant (critical t =
2.306)
d. F = 39.07; p-value (actual p-value using Excel = 0.0002) <  =.05; it is significant (critical F =
5.32)

PTS: 1 TOP: Regression Analysis

31. Shown below is a portion of the computer output for a regression analysis relating sales (Y in millions
of dollars) and advertising expenditure (X in thousands of dollars).

Predictor Coefficient Standard Error


Constant 4.00 0.800
X 0.12 0.045

Analysis of Variance

SOURCE DF SS
Regression 1 1,400
Error 18 3,600

a. What has been the sample size for the above?


b. Perform a t test and determine whether or not advertising and sales are related. Let  = 0.05.
c. Compute the coefficient of determination.
d. Interpret the meaning of the value of the coefficient of determination that you found in Part c.
Be very specific.
e. Use the estimated regression equation and predict sales for an advertising expenditure of
$4,000. Give your answer in dollars.

ANS:
a. 20
b. t = 2.66; p-value is between 0.01 and 0.02; they are related (critical t = 2.101)
c. R2 = 0.28
d. 28% of variation in sales is explained by variation in advertising expenditure.
e. $4,480,000

PTS: 1 TOP: Regression Analysis

32. A company has recorded data on the daily demand for its product (Y in thousands of units) and the
unit price (X in hundreds of dollars). A sample of 15 days demand and associated prices resulted in the
following data.

X = 75 Y- )X- ) = -59


Y = 135 X- )2 = 94
Y- )2 = 100
SSE = 62.9681

a. Using the above information, develop the least-squares estimated regression line and write the
equation.
b. Compute the coefficient of determination.
c. Perform an F test and determine whether or not there is a significant relationship between
demand and unit price. Let  = 0.05.
d. Would the demand ever reach zero? If yes, at what price would the demand be zero?

ANS:
a. = 12.138 - 0.6277X
b. R2 = 0.3703
c. F = 7.65; p-value is between .01 and .025; reject Ho and conclude that demand and unit price
are related (critical F = 4.67)
d. Yes, at $1,934

PTS: 1 TOP: Regression Analysis

33. A regression and correlation analysis resulted in the following information regarding an independent
variable (x) and a dependent variable (y).

X = 42  (Y - )(X - ) = 37
Y = 63 (X - )2 = 84
n=7  (Y - )2 = 28

a. Develop the least squares estimated regression equation.


b. At 95% confidence, perform a t test and determine whether or not the slope is significantly
different from zero.
c. Perform an F test to determine whether or not the model is significant. Let  = 0.05.
d. Compute the coefficient of determination.

ANS:
a. = 6.3571 + 0.4405x
b. p-value < .05; reject Ho
c. p-value < .05; reject Ho
d. 0.582

PTS: 1 TOP: Regression Analysis