4018O dy 5 Institute of Rural Management Anand Course Name: Business Statistics and Analytics PRM40 (2019-21) Term -I End — Term Examination Duration of Exam: 2 Hrs 30 mins. Total Marks: 50 Weightage: 25% Instructions — 1. All questions are compulsory 2. Clarifications will not be addressed during the exam. Please make suitable assumptions if necessary 3. Open Book, Open Notes, Open Laptop and Calculator 4, Enjoy solving 5. Open the excel file that was sent to you for endterm examination. (Also, refer to question 3 and question 4.) The excel file contains three worksheets ~ Sheet 1, Sheet 2 and CPI. a.) From Sheet 1, delete the data in columns C and D of the worksheet b.) From Sheet 2, delete the data in columns F, G, H and I, Label V1 stands for Marks, V2 stands for Section, V3 stands for Hardwork, V4 stands for interaction . c) Sheet named CPI is for Question-4. Because, we have given you the regression output, you might not have to use this sheet to answer any Question Question -1 [10 marks] A Government scheme titled “Banish Poverty” promises to give a grant of Rs 200 crores to districts which have more than thirty percent families categorized as Below Poverty Line (BPI). Kalshera, a district somewhere in Western India, does not qualify for this grant. An NGO, “opportunities in poverty” ‘operating in Kalshera is extremely disappointed at losing an opportunity for tapping into government funds, It claims that Kalshera has more than 30% BPL families (alternative hypothesis) and hence should be considered for the grant. It does a quick dipstick survey wherein it draws a random sample of 500 rural households from Kalshera and finds that 165 households belong to the BPL category. It therefore stakes a claim for the “Banish Poverty” funding. Does its claim have a statistical justification? Reason out systematically at three different levels of significance ~ 1%, 5% and 10%, (Seven marks) ow, consider that 5000 houses were sampled and 1650 households belonged to the BPL category. Do sou tink thatthe calm now has greater statistical justification? Justify appropriately. (Three Marks) s Sconned with CamSconnerQuestion -2 [9 marks] Consider the following demand function fitted by regression analysis for time series data of Khadi apparel in india. Log D = 2.5 - 0.8*Log P: + 1.15*Log P2- 0.2*Log Income -1.2*time + € Where ¢ is the error term and: Log D = logarithm (with base e) of demand for khadi apparel (in million units) Log P:= logarithm (with base e) of price of Khadi apparel (in Rs) Log P2 = logarithm (with base e) of price of non-Khadi apparel (in Rs) Log income = logarithm (with base e) of per capita income of India (in Rs) time= time or trend variable having values as 1 for time period 1, 2 for time period 2 and so forth. Interpret each of the slope coefficients. (Six marks) Assuming that the model and all the coefficients passes the required F and t-tests (p-values are very low), Is there evidence that preference for Khadi is diminishing over the years? On what basis can you say s0? (three marks) int 1; #0299) — a a(egy) _14y A (Hint a: stean ee Hint; £29») = Fp” Hint3: Log x is an increasing function in x, i » lx increases, Log x increases) Question -3 [21 marks] Our old friends, Rancho Thukral(RT) and Abhishek Kejriwal(Ak), after doing PRM from IRMA, went ahead and also did FPRM from IRMA. They have now Joined as faculty in IRMA and are sharing an elective course called “Advanced BSA”(ABSA) which is being taught in 2 sections (A and B). They were Surprised to see that section A (taught by RT) outperformed section B (taught by AK) in the midterm. Hen« ce, RT set out to prove to the world that he is a better teacher than AK. His claim would go in the alternative hypothesis, of the excel file that was sent to you. 1) Clearly formulate 2.) Do a hypothesis te be accepted at 5 the null and alternative hypothesis, (2 marks) + st making suitable assumptions and give a.verdict on whether RT's claim can % significance level. (5 marks) Sconned with CamSconner‘AK was not in a good mood, when an enlightened student came to his office and said ~ “Sir, students in section A are clearly more hard-working on an average than students of section B. If you don’t trust me, you can ask the students themselves”, Hence, students in both the sections were asked the number of hours they study per week. Poor students had to fill the form, otherwise 0.1 GPA would be deducted. Thus, we were now able to obtain the data about the hard work that students are putting in. AK decided to build a regression model taking Marks as the dependent variable, and the following three as the independent variables — a.) Hardwork, measured in hours/week b.) Section - This is a dummy variable, which takes a value 1 if Section ~“A” and takes the value 0 if section =“B” c) Interaction = Hardwork*Section ‘AK decided to include interaction term in the model because he also wanted to confirm, if at all, because of the different instructors, itis the case that one section can get more marks on an average, by putting in one extra hour of hardwork. The multiple linear regression model is thus given as — Marks = a + B:*Hardwork + B2*Section + B3*Interaction + € _ Mats f 8 Where ¢ is the error term, (For the raw data, please refer to sheet 2 of the excel fle that was sent to you) eet ma >) Find the values of a,.6s, Bs and Bs by using the regression feature in data analysis toolpack of Microsoft Excel. (Four marks) 4) By looking at the value of the “significance F” in ANOVA table, multiple regression model at 5% significance level? (One mark) && Out of the three independent variables used to build model, which of the variables seem to be significant. What is the basis of your judgement? (Three marks) 4} Give the interpretation of B:. (Two marks) F/ Using the output of the above regression model, two different multiple linear equations, each section can be formed, which explains marks as a function of hardwork. Wi equations for section A and section 8 separately. (242 = Four marks) can we accept the proposed one for rite the Question -4 [10 marks] Some IRMA Alumni at Niti Aayog believe that per capita income influences the corruption level in a country. They would want to test their hypothesis using a regression model with the following independent variables. (Refer to worksheet named CPI in the excel file that was sent to you) Sconned with CamSconner} Numeric Variable ~ Per Capita Income (PCI), measured in dollars a) ia is a democracy, 0 if the as the value 1 if the country is a democracy, 0 1 ble - Democracy, which takes the b) Categorical Varial country is not @ democracy to know the absolute value of corruption, they looked at CPL(Corruption, Perception Scere ps leearered intries around the world, Index) as the dependent. variable of various cou! ‘the corruption Perception Index scores countries on a scale from 0 (highly corrupt) to 100 (very clean). ye Corruption Perception Index ‘The regression output obtained by excel is shown below — SUMMARY OUTPUT Regression Statistics Multiple R (0,908784634 RSquare 0,825889511 Adjusted RSquare —_0.822635109 Standard Error 7.70811052 Observations 110 ANOVA d SS MS F__gnificonce F Regression 2 30124.91 15062.46 253.761 2.42E-41 Residual 107 6350.85 59,3532 , Total 109 _36475.72 Coefficients andard Err tStat P-value Lower 95%Upper 95%ower 95.0s\pper 95.09 Intercept 27.78685741 1.073749 25.87835 7.276-48 25,65827 29.91544 2565827 29.91544 Percapitaincome$ 0,000826162 6.14E-05 13.45504 9.47E-25 0,000704 0.000948. 0.000704 0.000948 Democracy Y/N. 14,47493796_2.475658_5.846905_5.5E-08 9.567235 19.38264 9.567235 19.38264 &) From the excel output, write the estimated multiple linear regression model, {Two marks} 2) By looking at the value of the “significance F” in ANOVA table, can we accept the proposed multiple regression model at 5% significance level? (One mark) 3-7 Out of the two independent variables used to build model, which of the variables seem to be significant. What is the basis of your judgement? (One mark) 2”) Give the interpretation of the coefficient of Per Capita Income$. (Two marks) 5A Give the interpretation of the coefficient of Democracy. (Two marks) 6.) According to the model, what is the expected value of the Corruption Perception Index of a country which is not a democracy and has a per capita income of $ 5000? (Two marks) Sconned with CamSconner