Statistics – A prediction equation for starting salaries (in $1,000s)

1.
A prediction equation for
starting salaries (in $1,000s) and SAT scores was performed using simple linear
regression. In the regression printout shown below, what can be said about the
overall validity of the model at a level of significance of 5% ?

	SAT is not a good predictor for starting salary.
	The significance level for SAT indicates the slope is not equal to zero.

	None of the alternatives are correct.
	The significance level for the intercept indicates the model is not valid.

The significance level for SAT indicates the slope is equal to zero.

2.
A prediction equation for sales
and payroll was performed using simple linear regression. In the regression
printout shown below, which of the following statements is/are not true?

	Payroll is the independent variable.
	There is evidence of a positive linear relationship between Sales and Payroll based on α = 0.05.

	Payroll is a good predictor of Sales based on α = 0.05.
	The coefficient of determination is equal to 0.833333.

Payroll is not a good predictor of Sales based on α = 0.01.

3. Which of the following statements
provides the best guidance for model building?

	If the value of r2increases as more variables are added to the model, the variables should remain in the model, regardless of the magnitude of increase.
	If the value of the adjusted r2 increases as more variables are added to the model, the variables should remain in the model.

4.

	If the value of r2increases as more variables are added to the model, the variables should not remain in the model, regardless of the magnitude of the increase.
	If the value of the adjusted r2 increases as more variables are added to the model, the variables should not remain in the model.

5.

None of the statements provide accurate guidance.

4. The condition of an independent
variable being correlated to one or more other independent variables is
referred to as

	multicollinearity.
	statistical significance.

	The significance level for the F-test is not valid.
	autocorrelation.

heteroscedasticity.

5. Shop-Mart
Inc Study: Shopmart
Inc, a large department store, has collected the following monthly data on lost
sales revenue due to theft and the number of security guard hours on duty:

Lost Sales Revenue ($000s)	Total Security Guard hours	Lost Sales Revenue ($000s)	Total Security Guard hours
1.0	1350	2.0	950
1.4	1300	2.1	630
1.8	1200	2.3	600
1.9	1000

With regards, to Shop-Mart Inc
Study , it can be concluded that _____ % of the lost sales revenue is
explained by the number of security guard hours.

	22.25%
	88.97%

	75%
	79.17%

6.
With regards to the Bob-White-Study-I
results

Each additional family member
increases the predicted costs by how much?

	$110.47
	$35.53

	$16.83
	$168.3

7.
With regards to the Bob-White-Study-Iresults

What percent of the variation in
medical expenses is explained by the size of the family?

	69.5%
	47.4%

	48.3%
	55.27%

8.
Bob-White-Study-II: Bob White is conducting research on monthly expenses for medical
care, including over the counter medicine. His dependent variable is monthly
expenses for medical care while his independent variables are number of family
members (X1) and insurance type (government funded, private insurance and
other). He has coded insurance type as the following:
X₂ = 1 if government funded, X₃ = 1 if
private insurance

Below is his Excel output.

What is the prediction equation?

	Y = 144.91 + 11.63X1 – 13.70 X2 + 9.11X3
	Y = 144.91 + 11.63X1 + 13.70 X2 – 9.11X3

	Y = 144.91 + 11.63X1 + 13.70 X2 + 9.11X3
	Y = 144.91 + 11.63X1 – 13.70 X2 – 9.11X3

9.
With regards to Bob-White-Study-II
results,

What percent of the variation in
medical expenses is explained by the independent variables?

	85.9%
	73.79%

	95.23%
	71.82%

10.With
regards to Bob-White-Study-II results

Based on his model, what are the
predicted monthly expenses for a family of four with private insurance?

	$952.36
	$154.47

	$203.06
	$182.32

11.With
regards to Bob-White-Study-II results

Based on his model, what are the
predicted monthly expenses for a family of two with government funded
insurance?

	$182.32
	$154.47

	$952.36
	$203.06

12.With
regards to Bob-White-Study-II results

Based on his model, what are the
predicted monthly expenses for a family of five with no insurance?

	$182.32
	$952.36

	$154.47
	$203.06

13.With
regards to Bob-White-Study-II results

If the model is used to predict
actual monthly expenses, then the average prediction error will be

	$154.47
	$952.36

	$203.06
	$182.32

14.With
regards to Bob-White-Study-II results: the most important
variable in predicting monthly expenses is:

	number of family members
	monthly expenses

	government funded insurance
	private insurance