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Assignment 5

This document contains analysis of the relationships between various dependent and independent variables using linear regression models. It estimates lines of best fit and assesses the statistical significance of relationships. The key findings are: 1) Hours of TV decrease with age; 2) Coffee sales decrease on hotter days; 3) Tunnel traffic decreases with higher fees but other factors also influence it. The models explain a high percentage of variation for some relationships but a lower percentage for others.

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Donald Yum
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© © All Rights Reserved
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Download as DOCX, PDF, TXT or read online on Scribd
63 views

Assignment 5

This document contains analysis of the relationships between various dependent and independent variables using linear regression models. It estimates lines of best fit and assesses the statistical significance of relationships. The key findings are: 1) Hours of TV decrease with age; 2) Coffee sales decrease on hotter days; 3) Tunnel traffic decreases with higher fees but other factors also influence it. The models explain a high percentage of variation for some relationships but a lower percentage for others.

Uploaded by

Donald Yum
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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YUM Kwun Tung (1155047630)

Assignment 5

DSME 2011 K

1.

a) Hors of Television is the dependent variable.


b) Let = Hours of Television and X = age
According to summary output, required least squares estimated line: = 6.56 - 0.125X
Thus, Hours of Television = 6.56 - 0.125 * age
c) Test on 0 and
1
For 0, H0: 0 = 0 and H1:
0 0.
P-value for Intercept (0.000199) is smaller than (0.05). Thus, reject H 0.
For 1, H1: 1 = 0 and H1: 1
0.
P-value for Age (0.00124) is smaller than (0.05). Thus, reject H0.
In conclusion, there is a significant relationship between the two variables of hours of
television and age.
d) The coefficient of determination is 98.0% which means that 98% of the variation
in hours of television can be explained by the variation in age.

YUM Kwun Tung (1155047630)


Assignment 5

DSME 2011 K

2.

a) Dependent variable: Cups of


Coffee Sold
b) i = b0 + b1Xi, let = Cups of Coffee Sold and X = Temperature
According to summary output, required least squares estimated line: = 605.714 - 5.94X
Thus, Cups of Coffee Sold = 605.714 - 5.94 * Temperature
c) The coefficient of determination is 90.6% which means that 90.6% of the
variation in cups of coffee sold could be explained by the variation in temperature.
d) Test on b0 and
b1
For 0, H0: 0 = 0 and H1: 0 0.
P-value (0.00118) for Intercept is smaller than (0.05). Thus, reject H 0.
For 1, H1: 1 = 0 and H1: 1 0.
P-value for Temperature (0.00341) is smaller than (0.05). Thus, reject H0.
In conclusion, there is a significant relationship between the two variables of cups
of coffee sold and temperature.
e) When X = 90,
= 605.7145.94*90 =

70.85714286

YUM Kwun Tung (1155047630)


Assignment 5

DSME 2011 K

Therefore, it is expected that 71 cups of coffee will be sold for a


90 degree day.

3.
a) dependent variable: Traffic
Independent variable: Tunnel fee
Required regression line: Trffic = 306965.362 - 10170.8234 * Tunnel fee
b) R^2 = SSR / SST = 13758271258 / 15850959546 = 0.867977
Thus, 86.8% of the variation in Tunnel Traffic could be explained by the variation in
In Tunnel Fee.
c) The tunnel fee is not the only factor affecting the tunnel traffic.
Other factors such as traffic accidents, number of weekend users,
holidays and weather also affect the tunnel traffic.
d) Test on 1, H0: 1 = 0; H1: 10
P-value for Tunnel fee (1.05E-05) is smaller than (0.05). Thus, reject H0.
Thus, the sample evidence shows that the tunnel traffic and its fee have a linear
relationship when = 0.05.
e) H0: 1 = -9000; H1: 1 -9000
Standard error = 1254.372289
Test Stat = [-10171-(-9000)] / 1254.372289 = -0.93353465
Degrees of freedom = 12 - 2 = 10
At a 0.05 significance level, critical value = +/- 2.2281
Thus, do not reject H0 as |test statistic| <2.2281.

YUM Kwun Tung (1155047630)


Assignment 5

4.
a)

Scatter Plot

b)

DSME 2011 K

YUM Kwun Tung (1155047630)


Assignment 5

DSME 2011 K

From the summary output, b0 = 299876.8059 and b1 = 39.1697


Sales = 299876.8059 + 39.1697 * Income
= 299876.8059 +39.1697X
c) Since median family income of customer base cannot be 0, b0 just captures the
portion of the latest one-month sales total that varies with the factors other than
income. b1= 39.1697 means that as the median family income of customer base
increases by one dollar, the estimated mean latest one-month sales will increase by
$39.1697.
d) R^2= 14.72%. 14.72% of the total variation in the franchise's latest one-month
sales total can be explained by using the median family income of customer base.
e)

Income Residual Plot

There is a slight increase in the variance of the residuals at the higher end of the
median family income. In general, however, the assumption of homoscedasticity
seems to be intact.

The histogram does not suggest severe asymmetry nor abnormal extreme
observations. So the normality assumption also seems to be intact.
f) H0: = 0 ; H1: 0

YUM Kwun Tung (1155047630)


Assignment 5

DSME 2011 K

Test stastic.

Decision rule: Reject H0 when |t|>


2.0281
Decision: Since t = 2.4926 is greater than the upper critical bound 2.0281, reject H0.
There is enough evidence to conclude that there is a linear relationship between one-month
sales total and median income of customers base.
g)
You are 95% confident that the slope is somewhere between 7.2995
and 71.04.
5.
a)

Growth

b)

From the above data, b0 = 1595571


Sales = 1595571.479 + 26833.5438

YUM Kwun Tung (1155047630)


Assignment 5

DSME 2011 K

= 1595571.479 + 26833.54381X
c) b0 =1595571 means the estimated mean latest one-month sales total is
$1595571 when the annual population growth rate of customer base over
the past 10 years is zero. b1 = 26833.54 means that as the annual
population growth rate increases by 1%, the estimated mean latest onemonth sales total will increase by $26833.54.
d) r = 0.0126. Only 1.26% of the total variation in the franchise's latest onemonth sales total can be explained by the annual population growth rate of
customer base over the past 10 years.

e)

Growth Residual Plot

There seems to be a diamond shape pattern of the residual distribution.


Hence, there is a violation of the homoscedasticity assumption. The variance
is larger when the growth rate is closer to zero.

The histogram does not indicate severe asymmetry nor abnormal extreme

YUM Kwun Tung (1155047630)


Assignment 5

DSME 2011 K

observations. So the normality assumption seems to be intact.


f) H0: = 0 ; H1:
0

Decision rule: Reject H0 when |t|>2.0289.


Decision: t = 0.6776 is less than the upper critical bound 2.4926. Thus, do
not reject H0.
There is not enough evidence to conclude that there is a linear relationship
between one-month sales total and the annual population growth rate of
customer base over the past 10 years.
g)
6.
a) H0: S12 S22

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