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 1 
BUAD 310 Homework 4 Solutions
Due Tuesday, April 21, 2009 in class
All problems with page numbers are from the textbook:
1.
p. 555
#13.11
a.
b
0
= 29.347,
b
l
= 5.6128,
b
2
= 3.8344
b
0
is meaningless since we do not have data where size and rating are 0.
b
1
= 5.6128 implies that we estimate that mean sales price increases by $5,612.80 for each
increase of 100 square feet in house size, when the niceness rating stays constant.
b
2
= 3.8344 implies that we estimate that mean sales price increases by $3,834.40 for each
increase in niceness rating of 1, when the square footage remains constant.
b.
172.28 [from
y
= 29.347 + 5.6128(20) + 3.8344(8)]
2.
p. 555
#13.12
a.
b
0
= 7.5891,
b
l
= –2.3577,
b
2
= 1.6122,
b
3
= 0.5012
b.
y
= 7.5891 – 2.3577(3.70) + 1.6122(3.90) + .5012(6.50) = 8.41099
In other words, the predicted demand is 841,099 bottles.
Note
: There will be small differences in the answers due to rounding, that’s OK.
c.
sales revenue = ($3.70)(841,099 bottles) = $3,112,066
Note
: There will be small differences in the answers due to rounding, that’s OK.
3.
p. 563
#13.17 [parts 1, 2, 3, 4, and 7 only]
1)
242
.
3
5
.
10
;
5
.
10
7
6
.
73
)
1
2
(
10
6
.
73
)
1
(
;
6
.
73
2
s
k
n
SSE
s
SSE
2)
Total variation = 7447.5
Unexplained variation = 73.6
Explained variation = 7374
3)
99
.
5
.
7447
7374
2
R
987
.
)
1
2
(
10
1
10
1
10
2
99
.
)
1
(
1
1
2
2
k
n
n
n
k
R
R
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2
R
and
are close together and close to 1.
4)
F(model)
7)
p
value = 0.00 (which means less than .001).
Since this
p
value is less than
= .10, .05, .01, and .001, we have extremely strong evidence that
0
:
2
1
0
H
is false. That is, we have extremely strong evidence that at least one of
x
1
and
x
2
is significantly related to
y
.
4.
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