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# EconHM16 - Question#1 You have always been told that your...

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Question #1 You have always been told that your car insurance rate will decrease when you become older. Let us check this claim out using the data on 15 persons' ages and their quarterly insurance premiums in dollars. Download the data from here and then run the appropriate regression to test the linear dependence of insurance rate for cars on ages at the 1% level of significance. Hint: there are 5 correct answers We want to test H 0 : β = 0 against alternative H 1 : β ≠‚ 0 We want to test H 0 : β = 0 against alternative H 1 : β < 0 We want to test H 0 : β = 0 against alternative H 1 : β > 0 We want to test H 0 : ρ = 0 against alternative H 1 : ρ ≠‚ 0 We want to test H 0 : ρ = 0 against alternative H 1 : ρ < 0 We want to test H 0 : ρ = 0 against alternative H 1 : ρ > 0 The p-value for the test is 0.009 The p-value for the test is 0.016 The p-value for the test is 0.086 The p-value for the test is 0.170 The p-value for the test is 0.287 We will reject the null hypothesis. We will fail to reject the null hypothesis. We can conclude that insurance premium does depend negatively and linearly on age. There is insufficient evidence to conclude that insurance premium depends negatively and linearly on age. Question #2 Look at the example on page 75 (slide 41) of the course packet. They want you to do a test on the correlation coefficient (that is, a test to see if any linear relationship exists between two variables) between student population size and pizza sales, based on the Armani Pizza example. The data is provided here . Answer the following questions based on your findings.

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1. The sample correlation coefficient between sales in thousands of dollars and the number of students in thousands is given by 0.963366334 . If sales was measured in millions of dollars instead of thousands of dollars then the correlation coefficient o cannot be computed o would stay the same o would go up o would go down .
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