QBM101 Tutorial Questions Page 1

Module 4

Chapter 10 Simple Linear Regression

Question 1
A report by an educational researcher provides information that suggests that playing computer
games has a serious effect on school performance. In the report, averages on a national
mathematics test were compared with the percent of students in the state who play 2 or more hours
of computer games per day. The data collected in 7 states are given as follows:

State Percent, x Test score, y

1 12 61
2 7 72
3 16 59
4 23 52
5 9 67
6 17 56
7 10 64

It is given that:

7 7 7 7 7
n  7,  xi  94,  xi2  1448,  yi  431,  yi2  26811,  xi yi  5571.
i 1 i 1 i 1 i 1 i 1

a. Calculate and interpret the regression coefficients.

b. Find the least square regression line.
c. Estimate the test score if the percent of students in the state who play 2 or more hours of
computer games per day is
i. 18%.
ii. 28%
Comment on the reliability of your estimates.

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Question 2

A researcher studied the satisfaction levels of customers on the overall service of 100 accounting
firms. The following output was generated:

Regression Statistics

Multiple R 0.631
R Square 0.398
Adjusted R Square 0.392
Standard Error 0.66689

Coefficients

Coefficient t-value P-value

Constant 2.675 9.959 0.000
Overall service 0.719 8.057 0.000

a. What is the regression equation?

b. What does the intercept and slope of the above regression equation mean?
c. What is the strength of the relationship between the satisfaction level and overall service?

d. What is the value of the coefficient of determination? Interpret the value.

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Question 3

An experiment is conducted by a biochemist to examine the effect of temperature, x (measured in

0
C ) on the enzyme activity, y (measured in U ). The results are listed in the following table.

Temperature, Enzyme
x activity, y
15 2.8
20 3.6
25 4.3
30 5.3
35 6.0

The Microsoft Excel software is used to produce the following scatter plot and diagram with
missing values a to e.

7 Scatter plot of enzyme activity versus

Enzyme activity (in U)

6 temperature
5
4
3
2
1
0
0 10 20 30 40
Temperature (in degree Celsius)

SUMMARY OUTPUT
Regression Statistics
Multiple R 0.998555
R Square a
Adjusted R Square 0.99615
Standard Error 0.079582
Observations b

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ANOVA
df SS MS F Significance F
Regression 1 6.561 6.561 d 6.59E-05
Residual 3 0.019 0.006333
Total 4 c

Coefficients Standard error t stat p-value

Intercept 0.35 0.130767 e 0.075272
Statistics 0.162 0.005033 32.18614 6.59E-05

a. State the regression equation. Define x and yˆ.

b. State the values of the slope coefficient and the y-intercept. Interpret these regression
coefficients.

c. Find the values of a, b, c, d, and e.

d. What is the value of the coefficient of correlation? Interpret this value.

e. What is the value of the coefficient of determination? Interpret this value.

f. Estimate the enzyme activity if the temperature is

i. 28 0C

ii. 45 0C

Comment on the reliability of the estimates.

g. At the 1% level of significance, is there any linear relationship between the temperature
and the enzyme activity?

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Question 4

A company issuing credit cards is interested in examining the relationship between annual income
and annual expenditure on a credit card. A random sample of 20 credit card users was selected and
the annual income (ranging from $20,000 to $120,000) against the annual expenditure (ranging
from $1,800 to $11,500) on the credit cards was recorded. The regression of annual expenditure
(y), on annual income (x), was completed in Excel. The summary output and graphs follow. Note
that annual expenditure is in $ and annual income is in $’000.

SUMMARY OUTPUT

Regression Statistics

Multiple R 0.99830886

R Square 0.99662058

Adjusted R Square 0.996432834

Standard Error 176.2644833

Observations 20

ANOVA

df SS MS F Significance F

Regression 1 164926250 164926250 5308.357 1.06786E-23

Residual 18 559245.03 31069.17

Total 19 165485495

Coefficients Standard t Stat P-value

Error

Intercept 31.52419885 99.406357 0.317125 0.754798

Annual 98.1398642) 1.3469931 72.85848 1.07E-23

Income($’000)

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Scatterplot of income vs expenditure

14000
Annual expenditure ($) 12000
10000
8000
6000
4000
2000
0
0 20 40 60 80 100 120 140
Annual income ($'000)

a. How many credit card users were sampled?

b. Interpret the scatterplot.

c. Write down the equation of the fitted line.

d. Interpret the regression coefficients.

e. Estimate the annual expenditure using credit card with annual income of i) $50,000 and ii)
$150,000 and comment on the reliability of your estimates.

f. What is the value of the coefficient of determination? With reference to this value, does it
appear that annual income is useful for predicting annual expenditure paid by credit card?

g. Test whether there is any significant linear relationship between annual income and annual
expenditure using credit cards at the 5% level of significance.