Assignment 2 || ECO 204 || on Midterm 2 Syllabus

1. Solve the followings -

CGPA Monthly
𝒚̂𝒊
(out Salary (𝒙𝒊 − 𝒙)*
i 𝒙𝒊 − 𝒙 𝒚𝒊 − 𝒚 (𝒙𝒊 − 𝒙)𝟐 𝒚𝒊 − 𝒚̂𝒊 (𝒚𝒊 − 𝒚̂𝒊 )𝟐 (𝒚𝒊 − 𝒚)𝟐
of 4) (in 1000 (𝒚𝒊 − 𝒚) = 𝒃𝟎 + 𝒃𝟏 𝒙𝒊
taka)
1 2.6 33
2 3.4 36
3 3.6 40
4 3.2 35
5 3.5 39
6 2.9 36
n= ∑ 𝒙𝒊 = ∑ 𝒚𝒊 =
∑(𝒙𝒊 − 𝒙) ∗ (𝒚𝒊 − 𝒚) 𝑺𝑺𝑻
𝒃𝟏 = 𝑺𝑺𝑬
∑ 𝒙𝒊 ∑ 𝒚𝒊 ∑(𝒙𝒊 − 𝒙)𝟐
𝒙= 𝒚= ∑(𝒙𝒊 − 𝒙)(𝒚𝒊 − 𝒚) ∑(𝒙𝒊 − 𝒙)𝟐 = ∑(𝒚𝒊
𝒏 𝒏 And = ∑(𝒚𝒊 − 𝒚̂𝒊 )𝟐
𝒃𝟎 = 𝒚 − 𝒃𝟏 ∗ 𝒙 − 𝒚)𝟐

a. Find out the dependent and independent variable by using the concepts of correlation and causation?
b. Construct a simple linear population regression model based on (a)
c. Construct a simple linear sample regression model based on (a)
d. Write down the formula for intercept and slope coefficient?
e. Find out the estimated intercept and slope coefficient?
f. Write down the estimated linear regression equation and interpret the equation?
g. Predict a possible monthly salary if your CGPA were 3.9?
h. Compute SST, SSR, and SSE.
i. Compute the coefficient of determination R2. Comment on the goodness of fit.
j. What is the value of the sample correlation coefficient?
k. At the .05 level of significance, determine whether monthly income and attainted CGPA are related?

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 2. Problem Statement: Let’s say you are the manager of Cineplex Movie Theater and would like to estimate weekly gross revenue as a
function of advertising expenditures. You received the following regression results from the analyst.
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.96
R Square A
Adjusted R Square 0.89
Standard Error 0.64
Observations 8
ANOVA
df SS MS F Significance F
Regression 2 B 11.71 C 0.0018
Residual D 2.06 0.41
Total 7 25.5
Standard Lower Upper
Coefficients t Stat P-value
Error 95% 95%
Intercept 83.23 1.57 E 0.00 79.18 87.28
Television Advertising
($1000s) 2.29 F 7.53 0.00 1.51 3.07
Newspaper Advertising
($1000s) G 0.32 4.06 0.01 0.48 2.13

(a) Find out the appropriate values to fill up the places of A, B, C, D, E, F and G?
(b) Develop an estimated regression equation with both television advertising and newspaper advertising as independent variables.
(c) Interpret the slope coefficients?
(d) What is the estimate of the weekly gross revenue for a week when $3500 is spent on television advertising and $1800 is spent on newspaper
advertising?
(e) What is the existing hypothesis between gross revenue and television advertising?
(f) Conclude on the relationship between gross revenue and newspaper advertising?

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3. From the following data on daily water use (in liters) and family size (number of People), answer the questions below-

Daily Water Use Family Size

(in liters) (number of people)
75 2
160 4
170 5
190 6
130 3
200 8

(a) Identify the dependent and independent variable? Distinguish the concept of correlation and causation in the above context?
(b) Write down the Population Regression Function (PRF) by using the abovementioned variables? What is the assumption behind E(Ɛ)?
(c) Estimate the value of intercept (𝑏0 ) and slope coefficient (𝑏1 ) for SLRF?
(d) Compute the estimated regression equation and interpret the slope coefficient equation?
(e) Estimate of the monthly water use (in liters) when the family size is 10?
(f) Compute SSR, SST and SSE?
(g) Compute goodness of fit 𝑅 2 and interpret?
(h) Construct your hypothesis and test whether 𝑏1 (error value is 4.28) significant at α=5% by using critical value approach? Comment based on
conclusion?