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    This document contains solutions to practice problems involving categorical explanatory variables in regression analysis. It explains that average annual bonus can be predicted using a regression model with number of employees and a binary union variable. It also states that unionized companies pay $1259.50 more in bonuses than non-unionized companies of the same size, and shows how to interpret changes in variables like house price based on the coefficients in a regression model.

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    This document contains solutions to practice problems involving categorical explanatory variables in regression analysis. It explains that average annual bonus can be predicted using a regression model with number of employees and a binary union variable. It also states that unionized companies pay $1259.50 more in bonuses than non-unionized companies of the same size, and shows how to interpret changes in variables like house price based on the coefficients in a regression model.

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    36 views1 page

    Set 9 Solutions PDF

    Uploaded by

    A
    This document contains solutions to practice problems involving categorical explanatory variables in regression analysis. It explains that average annual bonus can be predicted using a regression model with number of employees and a binary union variable. It also states that unionized companies pay $1259.50 more in bonuses than non-unionized companies of the same size, and shows how to interpret changes in variables like house price based on the coefficients in a regression model.

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    SMMD: Practice Problem Set 9 (Solutions)

    Topics: Categorical Explanatory Variables

    1. (A) Average Annual Bonus = 347.9+0.6547 Employees +1259.5 Union.

    2. (D) This is because the p-values corresponding to the F-statistic and the t-
    statistics for the two x-variables are very small.

    3. (D) That the annual average bonus is $ 1259.50 more for unionized
    companies compared to non-unionized companies of the same size (same
    number of employees).

    4. (A) This is because the slope of the lines seems different for union and non-
    union employees.
    5. (B) Since the price is measured in $1000s, the value of the house becomes
    $23,400

    6. (C) In this case BDR = 1 and Hsize =100. The resulting expected change
    in price is 23.4 + 0.156  100 = 39.0 thousand dollars or $39,000.

    7. (B) The loss is 48.8 *$ 1000 = $48,800.

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