Question

(1)

A real estate agent says he can approximate the value of a house through the following equation: SP = 125,000 + 3000BR + 500BDR + 4000WC –6000P; where BR= # of bathrooms, BDR= # bedrooms, WC =Wine cellar and P=Pool. There are _____ zero-one variables in this regression model.

Select one:

a. 4

b. 3

c. 2

d. 1

(2)

A researcher believes, among other things, the town one lives in within the state influences the likelihood of contracting cancer. He has data from three towns and has decided to code the towns as follows X = Town, where: X = 0 if C’burg, X = 1 if B’burg, X = 2 if L'burg. This is an appropriate means for including qualitative data into his analysis.

Select one:

a. TRUE

b. FALSE

(3)

Unlike regression, trend analysis limits the prediction of the unknown variable to historical levels of the same variable.

Select one:

a. TRUE

b. FALSE

(4)

Which of the following tells us how much variation in the data can be explained by the regression model?

Select one:

a. degrees of freedom

b. t statistics

c. coefficient of determination

d. none of the above

(5)

Let us imagine that the number of automobile accidents in a certain region are related to the regional number of registered automobiles in tens of thousands (b1), alcoholic beverage sales in $10,000 (b2), and decrease in the price of gasoline in cents (b3). Furthermore, imagine that the regression formula has been calculated as: Y = a + b1X₁ + b2X₂ + b3X₃ where Y = the number of automobile accidents, a = 7.5, b1 = 3.5, b2 = 4.5, and b3 = 2.5 Calculate the expected number of automobile accidents for a football weekend if the region has 25,000 registered vehicles, $75,000 worth of beer is sold, and a gas war causes a 10 cent drop in a gallon of gas.

Select one:

a. 75

b. 475

c. 45

d. 306

(6)

A simple regression involves a single independent variable.

Select one:

a. TRUE

b. FALSE

(7)

Which of the following is a dummy variable?

Select one:

a. fish weight

b. fish length

c. fish species (trout or cobia)

d. None of these make sense

(8)

An independent variable has a coefficient of 2.9 and a standard deviation of 0.8. What is the T-ratio, given to the third decimal place?

Select one:

a. 2.76

b. 3.625

c. .3625

d. none of the above.

(9)

A real estate agent says he can approximate the value of a house through the following equation: SP = 125,000 + 3000BR + 500BDR + 4000WC –6000P; where BR= # of bathrooms, BDR= # bedrooms, WC =Wine cellar and P=Pool. The best selling price estimate for a 3 bedroom, 2 bath house with a wine cellar and pool is

Select one:

a. $133,000

b. $132,500

c. $131,000

d. $130,500

(10)

Which of the following is not an assumption for simple linear regression?

Select one:

a. The mean of each error component is zero.

b. Each error component follows an approximate normal distribution.

c. The error components lie on a straight line.

d. The variance for the error components is the same for each value of X.

Answer 1

1.

c. 2

(Wine cellar and pool)

2.

b. False

(0-1 variables are the appropriate ways to include qualitative variables)

3.

b. False

(Trend analysis is very similar to regression, and it does not limit the value of the unknown variable)

4.

c. Coefficient of determination

(Also known as R-squared)

5.

a. 75

(7.5 + 3.5*2.5 + 4.5*7.5 + 2.5*10)

6.

a. TRUE

(In statistics, simple linear regression is a linear regression model with a single explanatory variable. )

7.

c. Fish species (trout or cobia)

8.

b. 3.625

(2.9 divided by 0.8)

9.

d. $130,500

(125000 + 3000*2 + 500*3 + 4000 -6000)

10.

c. The error components lie on a straight line.