Question

1. Each observation in the following data set shows a person's income (measured in thousands of dollars) and whether that person purchased a particular product last year. Assign a zero for a No purchase and a 1 for a Yes, and estimate a logit model for the purchase of this product.

a. Write down the estimated logit model

b. Calculate the probability of buying the product if income is $40 (i.e., $40,000).

c. Calculate the probability of buying the product if income is $70 (i.e., $70,000).

d. Calculate and interpret the meaning of the odds ratio if income changes from $70 to $71.

Person	Income (000)	Purchase
1	$31	No
2	$50	No
3	$33	No
4	$77	Yes
5	$54	Yes
6	$78	Yes
7	$21	No
8	$46	Yes
9	$66	No
10	$89	Yes

Use the following command sequence to estimate logit functions in Minitab:

Stat,

Regression,

Binary Logistic Regression,

Fit Binary Logistic Regression Model,

select your Response variable

Response Event: 1

select your Predictor variable.

After estimating a logit function, you can compute the probability of an event occurring by hand, or you can have Minitab compute the probability of an event. With Minitab and after you compute your logit function use the following:

Stat,

Regression,

Binary Logistic Regression,

Predict.

Then enter the value of the independent variable for which you want to predict the probability of an event occurring.

Answer 1

Enter data :

Output :

a) ans is first 3 lines of output given above

B) 0.213583

C) 0.811589

D)

odd ratio is 1.0965

Probability of success is increases by 9.6% with one unit Change in income .

That is equivalent to :

Probability of success is increases by 9.6% when income changes from 70 to 71 .

Thank you.