probs-simplereg1 - Practice Problems on Correlation Simple...

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Practice Problems on Correlation & Simple Regression 1. Suppose that, across a sample of stores, the correlation coefficient between beer prices and beer sales is -0.65. What does this number indicate? (a) There is almost no variability in beer sales that is unexplained by beer price. (b) More beer sales tend to go along with lower beer prices. (c) As price increases by $1, beer sales decrease by 65% (d) All of the above are true. 2. The purpose of a scatterplot is: 3. The standard error of the sample regression slope tells you: 4. The correlation coefficient describes the _________ between 2 variables. 5. R 2 is a measure used to describe the overall fit of the regression line. Which of the following statements is/are correct about R 2 ? (a) In general, the closer the R 2 is to 1, the better the fit of the regression line to the points in the scatterplot. (b) R 2 tells you the proportion of the points in the scatterplot that fall right on the regression line. (c) R 2 will always decrease as you add new observations to your regression. (d) All of the above are true statements about R 2 . 6. A cost accountant is developing a regression model to predict the total cost of producing a batch of circuit boards as a function of the batch size. The independent and dependent variables for this regression would be:
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