Chapter 13

SIMPLE LINEAR REGRESSION

13.4 A car’s power output is primarily influenced by the size of its engine. A sample of 90 different
car models of three makes from the European market is stored in the file Cars . Develop a simple
regression model to predict power output (kW), based on engine size (displacement, in cubic
centimeters). Source: Data extracted from https://bit.ly/2E4WEHF.
a. Construct a scatter plot. For these data, b0 = -44.878 and b1 = 0.081.
b. Interpret the meaning of the slope, b1, in this problem.
c. Predict the mean power output for cars with a displacement of 2,000 cm3 .
d. What conclusion can you reach based on the results of (a)–(c)?

13.5 The file UP‐FBE contains satisfaction ratings, age, GPA, origin, and gender of 100 students at
the business department in a university in Hungary. The overall satisfaction of the students is
calculated as the sum of teaching quality, offered scholarships, affordable tuition fee, affordable
housing, careers service, and graduate employment, so the minimum overall satisfaction level is 6
and the maximum is 42. You want to examine the relationship between students’ overall satisfaction
with their GPA.
a. Construct a scatter plot.
b. Assuming a linear relationship, use the least-squares method to compute the regression
coefficients b0 and b1.
c. Interpret the meaning of the Y intercept, b0, and the slope, b1, in this problem.
d. Predict the mean overall satisfaction of the students with a GPA of 4.0.

13.6 Is an MBA a golden ticket? Pursuing an MBA is a major personal investment. Tuition and
expenses associated with business school programs are costly, but the high costs come with hopes
of career advancement and high salaries. A prospective MBA student would like to examine the
factors that impact starting salary upon graduation and decides to develop a model that uses
program per year tuition as a predictor of starting salary. Data were collected for 37 full-time MBA
programs offered at private universities. The data are stored in FTMBA .
Source: Data extracted from “U.S. News Business School Compass,” available at
premium.usnews.com/best-graduate-schools/top-business-schools/mba-rankings.
a. Construct a scatter plot.
b. Assuming a linear relationship, use the least-squares method to determine the regression
coefficients b0 and b1.
c. Interpret the meaning of the slope, b1, in this problem.
d. Predict the mean starting salary upon graduation for a program that has a per-year tuition cost of
$50,450.
e. What insights do you gain about the relationship between program per-year tuition and starting
salary upon graduation?

13.14 The r2 extracted from two research reports predicting sales are 0.45 and 0.95. Which report
will project sales better?

13.16 In Problem 13.4 on page 525, the engine size (displacement) was used to predict power
output of the cars (stored in Cars ). For those data, SSR = 213,502.341 and SST = 338,784.114.
a. Determine the coefficient of determination, r2 , and interpret its meaning.
b. Determine the standard error of the estimate.
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c. How useful do you think this regression model is for predicting the power output of cars?

13.17 In Problem 13.5 on page 525, you used the GPA to predict the overall satisfaction of university
students (stored in UP‐FBE ).
a. Determine the coefficient of determination, r2 , and interpret its meaning.
b. Determine the standard error of the estimate.
c. How useful do you think this regression model is for predicting overall satisfaction?

13.18 In Problem 13.6 on page 526, a prospective MBA student wanted to predict starting salary
upon graduation, based on program per-year tuition (stored in FTMBA ). Using the results of that
problem,
a. determine the coefficient of determination, r2 , and interpret its meaning.
b. determine the standard error of the estimate.
c. How useful do you think this regression model is for predicting starting salary?

13.23 The following results provide the X values, residuals, and a residual plot from a regression
analysis:

Is there any evidence of a pattern in the residuals? Explain.

13.24 The following results provide the X values, residuals, and a residual plot from a regression
analysis:

Is there any evidence of a pattern in the residuals? Explain.

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13.26 In Problem 13.4 on page 525, the engine size (displacement) was used to predict power
output of the cars (stored in Cars ). Evaluate whether the assumptions of regression have been
seriously violated.

13.35 What is the relationship between the price of crude oil and the price you pay at the pump for
gasoline? The file Oil & Gasoline contains the price ($) for a barrel of crude oil (Cushing, Oklahoma,
spot price) and a gallon of gasoline (U.S. average conventional spot price) for 388 weeks, ending
June 2, 2017. Source: Data extracted from www.eia.gov.
a. Construct a scatter plot with the price of oil on the horizontal axis and the price of gasoline on the
vertical axis.
b. Use the least-squares method to develop a simple linear regression equation to predict the price
of a gallon of gasoline using the price of a barrel of crude oil as the independent variable.
c. Interpret the meaning of the slope, b1, in this problem.
d. Plot the residuals versus the time period.
e. Compute the Durbin-Watson statistic.
f. At the 0.05 level of significance, is there evidence of positive autocorrelation among the residuals?
g. Based on the results of (d) through (f), is there reason to question the validity of the model?
h. What conclusions can you reach concerning the relationship between the price of a barrel of
crude oil and the price of a gallon of gasoline?

13.39 You are testing the null hypothesis that there is no linear relationship between two variables, X
and Y. From your sample of n = 10, you determine that r = 0.80.

a. What is the value of the t test statistic tSTAT? b. At the a = 0.05 level of significance, what are the
critical values?
c. Based on your answers to (a) and (b), what statistical decision should you make?

13.40 You are testing the null hypothesis that there is no linear relationship between two variables, X
and Y. From your sample of n = 18, you determine that b1 = +4.5 and Sb1 = 1.5.
a. What is the value of tSTAT?
b. At the a = 0.05 level of significance, what are the critical values?
c. Based on your answers to (a) and (b), what statistical decision should you make?
d. Construct a 95% confidence interval estimate of the population slope, b1.

13.41 You are testing the null hypothesis that there is no linear relationship between two variables, X
and Y. From your sample of n = 20, you determine that SSR = 60 and SSE = 40.
a. What is the value of FSTAT?
b. At the a = 0.05 level of significance, what is the critical value?
c. Based on your answers to (a) and (b), what statistical decision should you make?
d. Compute the correlation coefficient by first computing r2 and assuming that b1 is negative.
e. At the 0.05 level of significance, is there a significant correlation between X and Y?

13.42 In Problem 13.4 on page 525, the engine size (displacement) was used to predict power
output of the cars (stored in Cars ). From the results of that problem, b1 = 0.081 and Sb1 = 0.0066.
a. At the 0.05 level of significance, is there evidence of a linear relationship between the
displacement and power output of cars?
b. Construct a 95% confidence interval estimate of the population slope, b1.

13.43 In Problem 13.5 on page 525, you used the GPA to predict the overall satisfaction of university
students (stored in UP‐FBE ).

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a. At the 0.05 level of significance, is there evidence of a linear relationship between the GPA and
overall satisfaction?
b. Construct a 95% confidence interval estimate of the population slope, b1.

13.44 In Problem 13.6 on page 526, a prospective MBA student wanted to predict starting salary
upon graduation, based on program per-year tuition. The data are stored in FTMBA . Use the results
of that problem.
a. At the 0.05 level of significance, is there evidence of a linear relationship between the starting
salary upon graduation and program per-year tuition?
b. Construct a 95% confidence interval estimate of the population slope, b1.

13.55 Based on a sample of n = 20, the least-squares method was used to develop the following
prediction line: 𝑌̂ = 5 + 3𝑋𝑖 . In addition,
𝑛

𝑆𝑌𝑋 = 1.0, 𝑋̅ = 2, ∑(𝑋𝑖 − 𝑋̅)2 = 20

𝑖=1
a. Construct a 95% confidence interval estimate of the population mean response for X = 2.
b. Construct a 95% prediction interval of an individual response for X = 2.

13.56 Based on a sample of n = 20, the least-squares method was used to develop the following
prediction line: 𝑌̂ = 5 + 3𝑋𝑖 . In addition,
𝑛

𝑆𝑌𝑋 = 1.0, 𝑋̅ = 2, ∑(𝑋𝑖 − 𝑋̅)2 = 20

𝑖=1
a. Construct a 95% confidence interval estimate of the population mean response for X = 4.
b. Construct a 95% prediction interval of an individual response for X = 4.
c. Compare the results of (a) and (b) with those of Problem 13.55 (a) and (b). Which intervals are
wider? Why?

13.57 In Problem 13.5 on page 525, you used the GPA to predict the overall satisfaction of university
students (stored in UP‐FBE ).
a. Construct a 95% confidence interval estimate of the mean overall satisfaction for all students who
have a GPA of 3.5.
b. Construct a 95% prediction interval of the overall satisfaction of an individual student who has a
GPA of 3.5. c. Explain the difference in the results in (a) and (b).

3.58 In Problem 13.4 on page 525, the engine size (displacement) was used to predict power output
of the cars (stored in Cars ). For these data, SYX = 37.7314 and hi = 0.0163 when X = 1590.
a. Construct a 95% confidence interval estimate of the mean power output for all cars that have a
displacement of 1590 cm3.
b. Construct a 95% prediction interval of the power output of an individual car that has a
displacement of 1590 cm3.
c. Explain the difference in the results in (a) and (b).

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 Chapter 14
INTRODUCTION TO MULTIPLE REGRESSION
14.3 A nonprofit analyst seeks to determine which variables should be used to predict nonprofit
charitable commitment, a nonprofit organization commitment to its charitable purpose. Two
independent variables under consideration are Revenue, a measurement of total revenue, in billions
of dollars, as a measure of nonprofit size X1 and Efficiency, a measurement of the percent of private
donations remaining after fundraising expenses as a measure of nonprofit fundraising efficiency X2.
The dependent variable Y is Commitment, a measurement of the percent of total expenses that are
allocated directly to charitable services. Data are collected from a random sample of 98 nonprofit
organizations, with the following results:

a. State the multiple regression equation.

b. Interpret the meaning of the slopes, b1 and b2, in this problem.
c. What conclusions can you reach concerning nonprofit charitable commitment?

14.4 The popularity of a websites dedicated to food and cooking depends on the number of people
who visit them and consume the content they host. The file Chicken contains data on 40 chicken-
based main course recipes posted at one such website, measuring each recipe’s popularity by the
number of views, the number of times it was saved in users’ online recipe books, and the number of
ingredients it needs (to determine whether it is easy or complicated).
Source: Data extracted from nosalty.hu.
a. State the multiple regression equation.
b. Interpret the meaning of the slopes, b1 and b2, in this problem.
c. Predict the mean number of times the recipes with 50,000 views and 15 ingredients were saved in
users’ online recipe books.
d. Construct a 95% confidence interval estimate for the mean number of times recipes with 50,000
views and 15 ingredients were saved in users’ online recipe books.
e. Construct a 95% confidence interval estimate for the number of times an individual recipe with 8,000
views and 15 ingredients was saved in users’ online recipe books. 1

14.5 A car’s power output is influenced by several factors. A sample of 90 different car models of three
makes from the European market is stored in the file Cars .
Source: Data extracted from https://bit.ly/2E4WEHF.
Develop a multiple linear regression model to predict power output (kW), based on engine size
(displacement, in cubic centimeters) and maximum speed (km/h).
a. State the multiple regression equation.
b. Interpret the meaning of the slopes, b1 and b2, in this problem.
c. Explain why the regression coefficient, b0, has no practical meaning in the context of this problem.
d. Predict the mean power output of cars that have a displacement of 1800 cm3 and maximum speed
of 200 km/h.
e. Construct a 95% confidence interval estimate for the mean power output for cars that have a
displacement of 1,800 cm3 and maximum speed of 200 km/h.
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f. Construct a 95% confidence interval estimate for the power output for a car that has a displacement
of 1,800 cm3 displacement and maximum speed of 200 km/h.
g. What conclusion can you reach concerning this regression model? Compare your results to those
in Problem 13.16.

14.6 Human resource managers face the business problem of assessing the impact of factors on full-
time job growth. A human resource manager is interested in the impact of full-time voluntary turnover
and total worldwide revenues on the number of full-time job openings at the beginning of a new year.
Data are collected from a sample of 63 “best companies to work for.” The total number of full-time job
openings as of February 2017, the full-time voluntary turnover in the past year (in %), and the total
worldwide revenue (in $billions) are recorded and stored in BestCompanies . Source: Data extracted
from Best Companies to Work For, 2017, fortune.com/ best-companies.
a. State the multiple regression equation.
b. Interpret the meaning of the slopes, b1 and b2, in this problem.
c. Interpret the meaning of the regression coefficient, b0. d. Which factor has the greatest effect on
the number of full-time jobs added in the last year? Explain.

14.9 The following ANOVA summary table is for a multiple regression model with two independent
variables:

a. Determine the regression mean square (MSR) and the mean square error (MSE).
b. Compute the overall FSTAT test statistic.
c. Determine whether there is a significant relationship between Y and the two independent variables
at the 0.05 level of significance.
d. Compute the coefficient of multiple determination, r2 , and interpret its meaning.
e. Compute the adjusted r2 .

14.10 The following ANOVA summary table is for a multiple regression model with two independent
variables:

a. Determine the regression mean square (MSR) and the mean square error (MSE).
b. Compute the overall FSTAT test statistic.
c. Determine whether there is a significant relationship between Y and the two independent variables
at the 0.05 level of significance.
d. Compute the coefficient of multiple determination, r2 , and interpret its meaning.
e. Compute the adjusted r2 .

14.12 In Problem 14.3 on page 573, you predicted nonprofit charitable commitment, based on
nonprofit revenue and fundraising efficiency. The regression analysis resulted in this ANOVA table:

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Determine whether there is a significant relationship between commitment and the two independent
variables at the 0.05 level of significance.

14.13 In Problem 14.5 on page 606, you used displacement and maximum speed to predict power
output of cars (stored in Cars ). Use the results from that problem to do the following:
a. Determine whether there is a significant relationship between power output and the two independent
variables (displacement and maximum speed) at the 0.05 level of significance.
b. Interpret the meaning of the p-value.
c. Compute the coefficient of multiple determination, r2 , and interpret its meaning.
d. Compute the adjusted r2 .

14.14 In Problem 14.4 on page 573, you used views and number of ingredients to predict the number
of times recipes were saved in users’ online recipe books (stored in Chicken ). Using the results from
that problem,
a. determine whether there is a significant relationship between the number of saves in online recipe
books and the two independent variables (views and number of ingredients) at the 0.05 level of
significance.
b. interpret the meaning of the p-value. c. compute the coefficient of multiple determination, r2 , and
interpret its meaning. d. compute the adjusted r2.

14.15 In Problem 14.7 on page 574, you used the weekly staff count and remote engineering hours to
predict standby hours (stored in Nickels26Weeks ). Using the results from that problem,
a. determine whether there is a significant relationship between standby hours and the two
independent variables (total staff present and remote engineering hours) at the 0.05 level of
significance.
b. interpret the meaning of the p-value.