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Tutorial 7 questions and solutions_Tutorial 5

# Tutorial 7 questions and solutions_Tutorial 5 - Tutorial 5...

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1 Tutorial 5 Exercises for Lecture 5 MULTIPLE REGRESSION A At the end of this tutorial you should be able to calculate and interpret the coefficients of the multiple regression model conduct hypothesis tests and construct confidence intervals concerning the regression coefficients conduct an F -test for the significance of the regression model calculate and interpret the coefficient of multiple determination . calculate adjusted r 2 . calculate and interpret selected measures of variation ( SST , SSR , SSE, standard error of the estimate) use the estimated regression model to generate predictions book Reading : Black et al , Sections14.1 – 14.4. Q1. Deciding where to locate a new retail store is one of the most important decisions that a manager can make. The president of a chain of video rental stores plans to use a regression model to help select a location for a new store. Annual gross revenue is used as the dependent variable and it is believed that the following variables will help determine success. Number of people living within 2 kilometres of the store (PEOPLE) Mean income of households within 2 kilometres of the store (INCOME) Number of competitors within 2 kilometres of the store (COMPET) Rental price of a newly released movie (PRICE) Fifty video stores are randomly selected and the values of each of the variables is recorded as follows: STORE REVENUE PEOPLE INCOME COMPET PRICE 1 2 3 : 50 \$323581 343682 375264 : 314170 5556 5917 5483 : 5453 \$42746 43106 46993 : 35821 3 2 5 : 3 \$2.49 2.99 2.99 : 2.49 The mean of REVENUE is \$343,966. Selected parts of the EXCEL computer output are presented below. Regression Statistics Multiple R 0.7668 R Square 0.5880 Adjusted R Square ***** Standard Error ***** Observations ***** ANOVA df SS MS F Significance F Regression 4 4.06E+10 ***** ***** ***** Residual 45 2.84E+10 ***** Total 49 6.90E+10 Coefficients Standard Error t Stat P-value Lower 95% Intercept -20297 54939 ***** ***** ***** PEOPLE 6.439 3.705 ***** ***** *****

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2 INCOME 7.272 0.9358 ***** ***** ***** COMPET -6709.4 3828.5 ***** ***** ***** PRICE 15969 10219 ***** ***** ***** a) Write down the estimated equation and interpret the estimated coefficients.
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Tutorial 7 questions and solutions_Tutorial 5 - Tutorial 5...

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