BUAD 310 Homework 7 (Total 50 points) Due Tuesday, November 22, 2011 in class Please ensure that your

answers arc neat and legible. All problems with page numbers arc from the textbook. 1. p. 126 #22 lOnly parts (a), (c), and (e)1 a. Explanatory variable: temperature. Response variable: kilowatt hours. Correlation negative, linear and with significant variation due to other factors affecting use of electricity for heating. c. Explanatory variable: Weight. Response Variable: Fuel. Correlation positive, linear depending on efficiency of scaled engines, significant variation depending of flight path and other factors. e. Explanatory Variable: Exercise. Response Variable: Fat. Correlation: negative with variation dependent on the the rates of metabolisms of different individuals and response to diet and other factors.

2. p. 482 #12, #14, and #16 iFxplain why ills true or falsel 12. False: Regression doesnt require several of the response varibel for each value of the predictor to calculate averages. 14. True: The only slope possible in the event of no correlation is 0. Since it is the related to 2-squared which must be 0. 16. True: The relationship is proportional to the number of orders as long as the intercept is 0 otherwise the ratio changes. 3.p.483 #36 36. a. The slope is the average number of packages per hour. The intercept is either a loss of efficiency of productivity or most likely an extrapolation from the range of data. b. 10 cartons/day= b1. -1/6=.16667= b0. c. No. r-squared is a measure that will not change with conversion, though conversion may reveal information in the data. d. Se is smaller since the sample size is multiplied by 12 due the the number of packs per carton.

Minitab assi2nrncnt: 4. (Data set: Cars.MTW) Cars were selected at random from among 1993 passenger car models that were listed in both the 1993 Consumer Reports issue and the 1993 PACE Buying Guide. Pickup trucks and Sport/Utility vehicles were eliminated due to incomplete information in the Consumer Reports source. Duplicate models (e.g.. Dodge Shadow and Plymouth Sundance) were listed at most one time. [Download this data set from Blackboard] Number afeases: 93 Variable names & descriptions: Manufacturer Model AveS: Average selling price City MPG: Average miles per gallon in city by EPA rating Hwy MPG: Average miles per gallon on hwy by EPA rating Air Bags: Air bags standard (0, 1 = driver only, 2 = driver & passenger) Cylinders: Number of cylinders 1-IP: Horsepower (maximum) Trans: Manual transmission available (0 = no, I = yes) Fuel: Fuel tank capacity in gallons Passengers: Passenger capacity (persons) reight: In pounds Domestic: (0 = non-US manufacturer. 1 = US manufacturer) Questions: a) If you were asked to pick only one of the listed variables to use in a simple linear regression model to predict the average selling price, which would it be? What is the fitted regression equation using this variable? Horsepower. The regression equation is: Ave$ = - 1.40 + 0.145 HP. b) Build a 95% confidence interval for the slope of your chosen variable. Interpret it. B1= 0.14537 (+/-) 1.987(0.0119)=> .1217B1.1690 This B1 is the average rate of change in value per additional horse power with 90 DGF. It the the range of value the change may potentially cause with 95% confidence.

c) Using your model from part a), what is the residual value for the first observation in the data set? $3000 d) Now use the variables HwyMPG, AirBags. HP, and Domestic in a multiple regression. Whatis your resulting regression equation?
Ave$ = 12.6 - 0.316 Hwy MPG + 3.56 Air Bags + 0.105 HP - 3.70 Domestic

e) In the model from above, what does each of your coefficients values indicate about their relationships to Average Price? [Give a general interpretation of the estimated coefficients.] The estimated coefficients express the amount of change in average selling price that results from a change in any one of the explanatory variables. Assuming a principle of ceretus paribus all other thing s held constant each expresses the change expected on average from an increase or decrease in a singe variable. f) What percent of variation in Average Price did you explain using the above? r-squared=71.4% of the variation is explained. g) Assume I plan to purchase a domestic car with the following characteristics. What range of prices would you tell mc to expect? Hwy MPG: 42 Air Bags: 2 lIP: 220 Range of Prices= 25.848 (+/-) 1.988(5.2787/93=.5474) Range of Prices= 25.848 (+/-) 1.0882 24.7598 Prices(thousand$) 26.9362 with 95% confidence. And 87 DGF.