University of California, Davis
ARE 106  Winter 2011
Homework 3
There will be no quiz based on these homework problems, however this material will be
covered on the midterm exam held Thursday, January 27, 2011
Conceptual Questions
1. What are null and alternative hypotheses? Explain the diﬀerence between them.
2. What is an interval estimate?
3. What is a test statistic?
4. When could we use a Ztest and when could we use a ttest to assess the signiﬁcance
of our estimated regression coeﬃcient,
b
2
?
5. What is a Type I error?
6. What is a Type II error?
7. How could we be 100% sure never to make a Type I error? Why might this not be a
good idea?
Computational Questions
1. You are the marketing manager for midsized paper supply company. You gather data
on monthly advertising expenditure and sales in order to assess the eﬀectiveness of the
company’s ad spending. You want to consider the eﬀect of ad spending on sales and
conduct (Note that all ﬁgures are in thousands of dollars.)
Advertising Spending
3
3
6
8
5
6
5
4
4
Sales
40
34
55
49
48
50
38
42
50
(a) Write out the population regression function .
(b) Obtain estimates for the slope and intercept of the regression equation using the
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 Spring '10
 Havenner
 Regression Analysis

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