Question

2. The famous rap group "Lizzo and the Aaardvarks" is contemplating a tour of some major cities to promote its new album. To prepare themselves for the tour they decide to run a regression to see if average ticket sales at concert site (y) are influenced by median income in the city (x1), median tax share (x2), and size of the residential population (x3). From a sample of 34 of the largest cities, the following least squares regression was obtained:

y=-11.9+1.29x1-0.70x2 +0.63x3 ;

(0.185) (0.065) (0.079)

Where figures in parentheses are the corresponding standard errors.

R2 = 0.535 ; SST = 2000

(a) Interpret in the context of the problem the estimated coefficient on x3.

(b) What is the value of SSE?

(c) Interpret, in the context of the problem, the value of the R^2 .

(d) Lead rapper, Lizzo, says that the size of the city population has no effect on average ticket sales. Others in the band disagree. Who is right? Explain.

Answer 1