DSC 291 -- Spring 11 -- Exam 1 Name________________________________ Questions 1 10 (4 points each) 1.

. In simple linear regression the model that fits the data the best: A. Minimizes sum of the squared errors (SSE) B. Maximizes the sum of squares due to regression (SSR) C. Maximizes r2 D. All of the above In multiple linear regression when the slope of a variable is not statistically significant you should A. Continue to use the model as long as the model is statistically significant B. Eliminate the variable and rerun the analysis C. Use the model as long as the r2 is > 0.90 D. None of the above In simple linear regression you get b1 = -4. The p-value associated with the hypothesis test about 1 is 0.0001. What is the only interval from below that could be the 95% confidence for 1? A. (-9, 1) B. (2, 6) C. (-8, -1) D. (-6, -2) In a regression analysis you get r2 = 0.72. This means that: A. SSR < SSE B. SSR = SSE C. SSR > SSE D. Not enough info to tell A model with a statistically insignificant y-intercept should never be used. A. True B. False In a simple linear regression if the 95% confidence interval for y|x=5 is (7, 13) then the 95% prediction interval for y given x = 5 can only be: A. (6, 15) B. (8, 12) C. (6, 14) D. (5, 13) In a simple linear regression where = 12 if the 95% prediction interval for y when x = 13 is (12, 18) then the 95% prediction interval for y when x = 10 can only be: A. (10, 16) B. (13, 20) C. (12, 14) D. (10.1, 15.9)

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In a simple linear regression if the F-statistic has a p-value = 0.0245 then the p-value of the t-statistic associated with 0 will be: A. < 0.0245 B. = 0.0245 C. > 0.0245 D. Not enough information to tell In a multiple regression with 3 independent variables if the F-test is rejected for =0.10 then all the slopes associated with the independent variables are statistically significantly different from 0 for = 0.10. A. True B. False In a simple linear regression if r2 > 0.1 then the model is statistically significant. A. True B. False

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For questions 11 17 utilize the following data and its associated multiple regression analysis. The dependent variable is annual Sales (in thousands of dollars) for Hair So Shiny, a shampoo. The independent variables are AdvBudget (the annual advertising budget for Hair So Shiny, in thousands of dollars), BudgetRatio (the ratio of the advertising budget for Hair So Shiny to the advertising budget for Hair So Soft, the major competitive shampoo), and DispInc (the disposable income in the year in billions of dollars).
Observation 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Sales 105,000 105,000 121,600 113,750 113,750 128,925 142,500 126,000 162,000 191,625 189,000 210,000 224,250 AdvBudget 16,300 15,800 16,000 14,200 15,000 14,000 15,400 18,250 17,300 23,000 19,300 23,056 26,000 25,000 27,500 30,000
The REG Procedure

BudgetRatio 1.25 1.34 1.22 1.00 1.15 1.13 1.05 1.27 1.07 1.17 1.07 1.54 1.59 1.50 1.50 1.50

DispInc 547.9 593.4 638.9 695.3 751.8 810.3 914.5 998.3 1096.1 1194.4 1311.5 1462.9 1641.7 1650.0 1675.0 1700.0

Dependent Variable: Sales Analysis of Variance Source Model Error Corrected Total DF 3 9 12 Sum of Squares 20156028160 894568667 21050596827 9969.78027 148723 Mean Square 6718676053 99396519 R-Square Adj R-Sq F Value 67.59 Pr > F <.0001

Root MSE Dependent Mean

0.9575 0.9433

Parameter Estimates Variable Intercept AdvBudget BudgetRatio DispInc DF 1 1 1 1 Parameter Estimate 30626 3.89319 -29607 86.51869 Standard Error 19808 2.08120 13217 18.69330 t Value 1.55 1.87 -2.24 4.63 Pr > |t| 0.1565 0.0942 0.0453 0.0012

The REG Procedure Output Statistics Obs 14 15 16 Dependent Variable . . . Predicted Value 226300 238196 250092 Std Error Mean Predict 6572 7886 11286 95% CL Mean 211434 220356 224561 241167 256037 275624 95% CL Predict 199288 209440 216026 253313 266953 284159 Residual . . .

Questions 11 17 (6 points each) 11. Should this model be used for prediction (This is a statistical question not a contextual question)? Why or why not? (5 points)

12.

What is the value of b3? In the context of this situation, what is the interpretation of b3?

13.

What is the value of b0? In the context of this situation, what is the interpretation of b0?

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Using = 0.10 and critical values determine which slopes are statistically significant. (Show your work).

15.

Calculate a 95% confidence interval for 3.

16.

Next year the company is planning on an advertising budget of $27,500,000 which is 1.5 times the anticipated advertising budget of the competitive product. In addition the company expects disposable income to be $1675 billion. Can the company be at least 95% confident that their sales will exceed $210,000,000? Why or why not?

17.

The company thinks disposable income will increase by $1 billion next year. Keeping the advertising budgets of both products fixed can the company be at least 95% confident sales will increase by at least $40,000? Why or why not?

Questions 18 is worth 7 points 18. You have a data set with 5 observations of a dependent variable y and 2 independent variables x1 and x2. Write out both the X and the X matrix.

Questions 19 20 are worth 5 points each 19. When doing a simple linear regression analysis and performing the matrix multiplication XX, in the resulting matrix the entries in the first row second column and second row first column are the same and equal: A. n B. The sum of the xs squared C. The square of the sum of the xs D. The sum of the xs If one of the columns of the X matrix is linearly dependent on another column in the X matrix then X is not of full rank and therefore you cannot A. Multiply X and X B. Invert XX C. Find X D. None of the above

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Question 21 is worth 1 points 21. SAS is the world class standard for statistical analysis packages and despite its obvious shortcomings it is Important to learn Desired by employers A good thing to have on your resume Extremely flexible and powerful Accepted and used worldwide, and In a pinch it will behave as your best friend.

A. True

B. False

C. Say What?

D. Give me another question please.