Quantitative Techniques for Management Sciences

Practice Questions

1. Table 3.8 gives data on gross domestic product (GDP) for the United States.
a. Plot nominal GDP and real GDP over time.
b. Estimate simple regressions for nominal GDP and real GDP as the dependent
variable and time as the independent variable.
c. Interpret the regression results in detail.

2. Consider the following regression results

Where, Y = labour force participation rate of women in 1972 and X = labour

force participation rate of women in 1968. The regression results were obtained
from a sample of 19 cities in the United States.
a. Interpret the regression coefficients.
b. Are the regression coefficients statistically significant at the 5% level? Show
necessary calculations.
c. Explain the value of r-squared.
d. Test the null hypothesis H0: B2=1 using the t-test at the 1% level of significance.

3. Table 5.5 gives data on the average public teacher pay (annual salary in dollars) and
spending on public schools per pupil (dollars) for several states in the US.

a. Prepare a scatter plot with salary on the Y axis and spending on the X axis. Also
fit a regression line through the scatter plot.
b. Generate and discuss the descriptive statistics of the variables.
c. Generate and discuss the correlations between the variables.
d. Estimate the regression of salary on spending and interpret the results.
e. Generate the ANOVA table and explain how it can be used.
f. Use the 95% confidence interval to test the null hypothesis that the slope
coefficient is equal to zero.
g. Use the 99% confidence interval to test the null hypothesis that the slope
coefficient is equal to one.
4. The annual data on the Consumer Price Index (CPI) and the Producer Price Index
(PPI) is provided in Table 5.10.
a. Prepare a scatter plot with CPI on the Y axis and PPI on the X axis. Also fit a
regression line through the scatter plot.
b. Run a regression of CPI on PPI. Interpret the regression results.
c. Test the hypothesis that there is a one-to-one relationship between both the
indices. Use the t-test and confidence interval approach at the 1% level of
significance.
d. Use the residuals of the regression to examine the hypothesis that the error term is
normally distributed. Explain your answer.

5. Table 7.7 provides data on a number of variables.

Y = number of oil wells drilled

X2= price of the wellhead in the previous period
X3= domestic output
X4= GNP in dollars
X5= trend variable

a. Generate descriptive statistics and the pairwise correlations.

b. Estimate a multiple regression of Y on the X variables. Also interpret the
regression results in detail.
c. Test the overall significance of the regression model using the F-test.
d. Comment on the goodness of fit of the regression model. How would you explain
adjusted r-squared.
e. Use the residuals of the regression to examine the hypothesis that the error term is
normally distributed. Explain your answer.

6. Table 7.8 provides data on a number of variables.

Y= defence budget outlay for year t, in billions

X2= GNP for year t, in billions
X3= US military sales /assistance in year t, in billions
X4= aerospace industry sales in billions
X5= military conflicts involving more than 100,000 troops. The dummy variable
takes a value of 1 when 100,000 or more troops are involved and 0 otherwise.

a. Generate descriptive statistics and the pairwise correlations.

b. Estimate a multiple regression of Y on the X variables. Also interpret the
regression results in detail.
c. Test the following null hypotheses using the 95% confidence interval and t-test
approach: (1) B2=1; (2) B3=1.
d. Test the overall significance of the regression model using the F-test.
 e. Comment on the goodness of fit of the regression model. How would you explain
adjusted r-squared.
f. Use the residuals of the regression to examine the hypothesis that the error term is
normally distributed. Explain your answer.

7. Table 8.10 gives data used by a telephone cable manufacturer to predict sales to a
major customer over a period of time. The variables are:
Y= annual sales in MPF, million paired feet
X2= GNP in billions
X3= housing starts, thousands of units
X4= unemployment rate %
X5= prime rate lagged 6 months
X6= Customer line gains %

a. Generate descriptive statistics and the pairwise correlations.

b. Estimate a multiple regression of Y on the X variables. Also interpret the regression
results in detail.
c. Test the following null hypotheses using the 95% confidence interval and t-test
approach: (1) B2=1; (2) B3=1.
d. Test the overall significance of the regression model using the F-test.
e. Comment on the goodness of fit of the regression model. How would you explain
adjusted r-squared.
f. Use the residuals of the regression to examine the hypothesis that the error term is
normally distributed. Explain your answer.