Econ 203 Hmwk 20

# Econ 203 Hmwk 20 - Question#1 Look at the example on slide...

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Look at the example on slide 58 (page 107) of the course packet. Assume you have conducted two regressions using the same data. The first regression on the "full model" had 9 independent variables, and a sample size of 200. You then run a "reduced model" after eliminating 4 of the independent variables that appeared insignificant on the basis of the individual t-tests. Data for the "full model": SSR=95,532 and MSE=645. Data for the "reduced model": SSR=7,978 and MSE=13,431. 1. The partial F statistic for this test is 33.93566 = 33.93566 . 2. The p-value for the above partial F-test is 2.32758e-21 = 2.32758e-21 . 3. What is your conclusion: reject the null hypothesis and proceed with using the full model Now conduct the same test, this time assuming the SSR from your reduced model is 92,300. 4. The partial F-stat and the corresponding p-value are respecively 1.2527 and .2902 = 0.2902 5. What is your conclusion: fail to reject the null hypothesis and proceed with using the reduced model You received a raw score of 100% on this question. Question #2 You worked as an intern at We Always Win Car Insurance Company last summer and noticed that individual car insurance premiums depended very much on the age of the individual, the number of traffic tickets received by the individual, whether the car was a convertible and the population density of the city in which the individual lived. To see if your conjecture is correct, you got the following EXCEL output . The p-value for the partial F-test when the "group" of variables you are testing is made up of the variable DENSITY is: 0.174472482 The p-value for the t-test of the individual slope coefficient for DENSITY is 0.174472482 1. You received a raw score of 100% on this question.

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Econ 203 Hmwk 20 - Question#1 Look at the example on slide...

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