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Question

You use this information to run a Multiple Linear Regression to predict Cost of living, along with

calculating various descriptive statistics. This is given in the Excel output (that is, the MLR has already been calculated. Your task is to interpret the data). Based on this information, in which city should you open a second office in? You must justify your answer. If you want to recommend 2 or 3 different cities and rank them based on the data and your findings, this is fine as well.  


City Cost of Living Index Rent (in City Centre) Monthly Pubic Trans Pass Loaf of Bread Milk Bottle of Wine (mid-range) Coffee

Mumbai 31.74 $1,642.68 $7.66 $0.41 $2.93 $10.73 $1.63

Prague 50.95 $1,240.48 $25.01 $0.92 $3.14 $5.46 $2.17

Warsaw 45.45 $1,060.06 $30.09 $0.69 $2.68 $6.84 $1.98

Athens 63.06 $569.12 $35.31 $0.80 $5.35 $8.24 $2.88

Rome 78.19 $2,354.10 $41.20 $1.38 $6.82 $7.06 $1.51

Seoul 83.45 $2,370.81 $50.53 $2.44 $7.90 $17.57 $1.79

Brussels 82.2 $1,734.75 $57.68 $1.66 $4.17 $8.24 $1.51

Madrid 66.75 $1,795.10 $64.27 $1.04 $3.63 $5.89 $1.58

Vancouver 74.06 $2,937.27 $74.28 $2.28 $7.12 $14.38 $1.47

Paris 89.94 $2,701.61 $85.92 $1.56 $4.68 $8.24 $1.51

Tokyo 92.94 $2,197.03 $88.77 $1.77 $6.46 $17.75 $1.49

Berlin 71.65 $1,695.77 $95.34 $1.24 $3.52 $5.89 $1.71

Amsterdam 85.9 $2,823.28 $105.93 $1.33 $4.34 $7.06 $1.71

New York 100 $5,877.45 $121.00 $2.93 $3.98 $15.00 $0.84

Sydney 90.78 $3,777.72 $124.55 $1.94 $4.43 $14.01 $2.26

Dublin 87.93 $3,025.83 $144.78 $1.37 $4.31 $14.12 $2.06

London 88.33 $4,069.99 $173.81 $1.23 $4.63 $10.53 $1.90

mean 75.49 $2,463.12 $78.01 $1.47 $4.71 $10.41 $1.76

median 82.2 $2,354.10 $74.28 $1.37 $4.34 $8.24 $1.71

min 31.74 $569.12 $7.66 $0.41 $2.68 $5.46 $0.84

max 100 $5,877.45 $173.81 $2.93 $7.90 $17.75 $2.88

Q1 66.75 $1,695.77 $41.20 $1.04 $3.63 $7.06 $1.51

Q3 88.33 $2,937.27 $105.93 $1.77 $5.35 $14.12 $1.98

New York 100 $5,877.45 $121.00 $2.93 $3.98 $15.00 $0.84


SUMMARY OUTPUT

Regression Statistics

Multiple R 0.935824078

R Square 0.875766706

Adjusted R Square 80.12%

Standard Error 8.30945321

Observations 17

ANOVA

df SS MS F Significance F

Regression 6 4867.380768 811.2301279 11.74895331 0.00049963

Residual 10 690.4701265 69.04701265

Total 16 5557.850894

Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%

Intercept 35.63950178 15.41876933 2.311436213 0.043401141 1.284342794 69.99466077 1.284342794 69.99466077

Rent (in City Centre) -0.003212852 0.003974813 -0.808302603 0.437722785 -0.012069287 0.005643584 -0.012069287 0.005643584

Monthly Pubic Trans Pass 0.299650003 0.076964051 3.89337619 0.002993072 0.128163411 0.471136595 0.128163411 0.471136595

Loaf of Bread 16.59481787 6.713301249 2.47193106 0.032995588 1.636650533 31.55298521 1.636650533 31.55298521

Milk 2.912081706 1.98941146 1.463790555 0.173964311 -1.520603261 7.344766672 -1.520603261 7.344766672

Bottle of Wine (mid-range) -0.889805486 0.740190296 -1.202130709 0.257006081 -2.539052244 0.759441271 -2.539052244 0.759441271

Coffee -2.527438053 6.484555358 -0.389762738 0.704884259 -16.97592778 11.92105168 -16.97592778 11.92105168

RESIDUAL OUTPUT

Observation Predicted Cost of Living Index Residuals Standard Residuals City

1 34.32607137 -2.586071368 -0.39366613 Mumbai

2 53.21656053 -2.266560525 -0.345028417 Prague

3 49.41436121 -3.964361215 -0.603477056 Warsaw

4 58.63611785 4.42388215 0.673427882 Athens

5 73.08449538 5.105504624 0.777188237 Rome

6 86.50256003 -3.052560026 -0.464677621 Seoul

7 75.89216916 6.307830843 0.960213003 Brussels

8 67.7257781 -0.975778105 -0.148538356 Madrid

9 90.51996071 -16.45996071 -2.50562653 Vancouver

10 81.07358731 8.866412685 1.349694525 Paris

11 83.80564633 9.134353675 1.390481989 Tokyo

12 80.02510391 -8.37510391 -1.274904778 Berlin

13 82.41624318 3.483756815 0.530316788 Amsterdam

14 97.75654811 2.243451893 0.341510693 New York

15 87.73993924 3.040060757 0.462774913 Sydney

16 86.81668291 1.11331709 0.169475303 Dublin

17 94.36817468 -6.038174677 -0.919164446 London


The Question is asking in which city a 2nd store would be well off, the first (baseline) store is based in New York, so this can not be the location for their 2nd business.

Please explain the reasoning behind the choice or choices in detail for review.

Top Answer

Tokyo, Sydney, or... View the full answer

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