CHAPTER 14—SIMPLE LINEAR REGRESSION

MULTIPLE CHOICE

1. In a regression analysis, the error term  is a random variable with a mean or expected value of
a. zero
b. one
c. any positive value
d. any value
ANS: A PTS: 1 TOP: Regression Analysis

2. The coefficient of determination

a. cannot be negative
b. is the square root of the coefficient of correlation
c. is the same as the coefficient of correlation
d. can be negative or positive
ANS: A PTS: 1 TOP: Regression Analysis

3. If the coefficient of determination is a positive value, then the coefficient of correlation

a. must also be positive
b. must be zero
c. can be either negative or positive
d. must be larger than 1
ANS: C PTS: 1 TOP: Regression Analysis

4. In regression analysis, the model in the form is called

a. regression equation
b. correlation equation
c. estimated regression equation
d. regression model
ANS: D PTS: 1 TOP: Regression Analysis

5. The mathematical equation relating the independent variable to the expected value of the dependent
variable; that is, E(y) = 0 + 1x, is known as
a. regression equation
b. correlation equation
c. estimated regression equation
d. regression model
ANS: A PTS: 1 TOP: Regression Analysis

6. The model developed from sample data that has the form of is known as
a. regression equation
b. correlation equation
c. estimated regression equation
d. regression model
ANS: C PTS: 1 TOP: Regression Analysis

7. In the following estimated regression equation

 a. b1 is the slope
b. b1 is the intercept
c. b0 is the slope
d. None of these alternatives is correct.
ANS: A PTS: 1 TOP: Regression Analysis

8. In regression analysis, the unbiased estimate of the variance is

a. coefficient of correlation
b. coefficient of determination
c. mean square error
d. slope of the regression equation
ANS: C PTS: 1 TOP: Regression Analysis

9. The interval estimate of the mean value of y for a given value of x is

a. prediction interval estimate
b. confidence interval estimate
c. average regression
d. x versus y correlation interval
ANS: B PTS: 1 TOP: Regression Analysis

10. The interval estimate of an individual value of y for a given value of x is

a. prediction interval estimate
b. confidence interval estimate
c. average regression
d. x versus y correlation interval
ANS: A PTS: 1 TOP: Regression Analysis

11. The standard error is the

a. t-statistic squared
b. square root of SSE
c. square root of SST
d. square root of MSE
ANS: D PTS: 1 TOP: Regression Analysis

12. If only MSE is known, you can compute the

a. r square
b. coefficient of determination
c. standard error
d. all of these alternatives are correct
ANS: C PTS: 1 TOP: Regression Analysis

13. The value of the coefficient of correlation (R)

a. can be equal to the value of the coefficient of determination (R2)
b. can never be equal to the value of the coefficient of determination (R2)
c. is always smaller than the value of the coefficient of determination
d. is always larger than the value of the coefficient of determination
ANS: A PTS: 1 TOP: Regression Analysis

14. In a regression analysis the standard error is determined to be 4. In this situation the MSE
 a. is 2
b. is 16
c. depends on the sample size
d. depends on the degrees of freedom
ANS: B PTS: 1 TOP: Regression Analysis

15. In regression analysis, which of the following is not a required assumption about the error term ?
a. The expected value of the error term is one.
b. The variance of the error term is the same for all values of X.
c. The values of the error term are independent.
d. The error term is normally distributed.
ANS: A PTS: 1 TOP: Regression Analysis

16. A regression analysis between sales (Y in $1000) and advertising (X in dollars) resulted in the
following equation

= 30,000 + 4 X

The above equation implies that an

a. increase of $4 in advertising is associated with an increase of $4,000 in sales
b. increase of $1 in advertising is associated with an increase of $4 in sales
c. increase of $1 in advertising is associated with an increase of $34,000 in sales
d. increase of $1 in advertising is associated with an increase of $4,000 in sales
ANS: D PTS: 1 TOP: Regression Analysis

17. Regression analysis is a statistical procedure for developing a mathematical equation that describes
how
a. one independent and one or more dependent variables are related
b. several independent and several dependent variables are related
c. one dependent and one or more independent variables are related
d. None of these alternatives is correct.
ANS: C PTS: 1 TOP: Regression Analysis

18. In a simple regression analysis (where Y is a dependent and X an independent variable), if the Y
intercept is positive, then
a. there is a positive correlation between X and Y
b. if X is increased, Y must also increase
c. if Y is increased, X must also increase
d. None of these alternatives is correct.
ANS: D PTS: 1 TOP: Regression Analysis

19. In regression analysis, the variable that is being predicted is the

a. dependent variable
b. independent variable
c. intervening variable
d. is usually x
ANS: A PTS: 1 TOP: Regression Analysis
20. The equation that describes how the dependent variable (y) is related to the independent variable (x) is
called
a. the correlation model
b. the regression model
c. correlation analysis
d. None of these alternatives is correct.
ANS: B PTS: 1 TOP: Regression Analysis

21. In regression analysis, the independent variable is

a. used to predict other independent variables
b. used to predict the dependent variable
c. called the intervening variable
d. the variable that is being predicted
ANS: B PTS: 1 TOP: Regression Analysis

22. Larger values of r2 imply that the observations are more closely grouped about the
a. average value of the independent variables
b. average value of the dependent variable
c. least squares line
d. origin
ANS: C PTS: 1 TOP: Regression Analysis

23. In a regression analysis, the coefficient of determination is 0.4225. The coefficient of correlation in
this situation is
a. 0.65
b. 0.1785
c. any positive value
d. any value
ANS: A PTS: 1 TOP: Regression Analysis

24. In a regression analysis, the coefficient of correlation is 0.16. The coefficient of determination in this
situation is
a. 0.4000
b. 0.0256
c. 4
d. 2.56
ANS: B PTS: 1 TOP: Regression Analysis

25. In simple linear regression analysis, which of the following is not true?
a. The F test and the t test yield the same conclusion.
b. The F test and the t test may or may not yield the same conclusion.
c. The relationship between X and Y is represented by means of a straight line.
d. The value of F = t2.
ANS: B PTS: 1 TOP: Regression Analysis

26. Correlation analysis is used to determine

a. the equation of the regression line
b. the strength of the relationship between the dependent and the independent variables
c. a specific value of the dependent variable for a given value of the independent variable
d. None of these alternatives is correct.
 ANS: B PTS: 1 TOP: Regression Analysis

27. In a regression and correlation analysis if r2 = 1, then

a. SSE must also be equal to one
b. SSE must be equal to zero
c. SSE can be any positive value
d. SSE must be negative
ANS: B PTS: 1 TOP: Regression Analysis

28. In a regression and correlation analysis if r2 = 1, then

a. SSE = SST
b. SSE = 1
c. SSR = SSE
d. SSR = SST
ANS: D PTS: 1 TOP: Regression Analysis

29. In a regression analysis, the regression equation is given by y = 12 - 6x. If SSE = 510 and SST = 1000,
then the coefficient of correlation is
a. -0.7
b. +0.7
c. 0.49
d. -0.49
ANS: A PTS: 1 TOP: Regression Analysis

30. In a regression analysis if SSE = 200 and SSR = 300, then the coefficient of determination is
a. 0.6667
b. 0.6000
c. 0.4000
d. 1.5000
ANS: B PTS: 1 TOP: Regression Analysis

31. If the coefficient of determination is equal to 1, then the coefficient of correlation

a. must also be equal to 1
b. can be either -1 or +1
c. can be any value between -1 to +1
d. must be -1
ANS: B PTS: 1 TOP: Regression Analysis

32. In a regression analysis, the variable that is being predicted

a. must have the same units as the variable doing the predicting
b. is the independent variable
c. is the dependent variable
d. usually is denoted by x
ANS: C PTS: 1 TOP: Regression Analysis

33. Regression analysis was applied between demand for a product (Y) and the price of the product (X),
and the following estimated regression equation was obtained.

= 120 - 10 X
 Based on the above estimated regression equation, if price is increased by 2 units, then demand is
expected to
a. increase by 120 units
b. increase by 100 units
c. increase by 20 units
d. decease by 20 units
ANS: D PTS: 1 TOP: Regression Analysis

34. The coefficient of correlation

a. is the square of the coefficient of determination
b. is the square root of the coefficient of determination
c. is the same as r-square
d. can never be negative
ANS: B PTS: 1 TOP: Regression Analysis

35. If the coefficient of correlation is a positive value, then the regression equation
a. must have a positive slope
b. must have a negative slope
c. could have either a positive or a negative slope
d. must have a positive y intercept
ANS: A PTS: 1 TOP: Regression Analysis

36. If the coefficient of correlation is 0.8, the percentage of variation in the dependent variable explained
by the variation in the independent variable is
a. 0.80%
b. 80%
c. 0.64%
d. 64%
ANS: D PTS: 1 TOP: Regression Analysis

37. In regression and correlation analysis, if SSE and SST are known, then with this information the
a. coefficient of determination can be computed
b. slope of the line can be computed
c. Y intercept can be computed
d. x intercept can be computed
ANS: A PTS: 1 TOP: Regression Analysis

38. In regression analysis, if the independent variable is measured in pounds, the dependent variable
a. must also be in pounds
b. must be in some unit of weight
c. cannot be in pounds
d. can be any units
ANS: D PTS: 1 TOP: Regression Analysis

39. If there is a very weak correlation between two variables, then the coefficient of determination must be
a. much larger than 1, if the correlation is positive
b. much smaller than -1, if the correlation is negative
c. much larger than one
d. None of these alternatives is correct.
 ANS: D PTS: 1 TOP: Regression Analysis

40. SSE can never be

a. larger than SST
b. smaller than SST
c. equal to 1
d. equal to zero
ANS: A PTS: 1 TOP: Regression Analysis

41. If the coefficient of correlation is -0.4, then the slope of the regression line
a. must also be -0.4
b. can be either negative or positive
c. must be negative
d. must be 0.16
ANS: C PTS: 1 TOP: Regression Analysis

42. If the coefficient of correlation is a negative value, then the coefficient of determination
a. must also be negative
b. must be zero
c. can be either negative or positive
d. must be positive
ANS: D PTS: 1 TOP: Regression Analysis

43. It is possible for the coefficient of determination to be

a. larger than 1
b. less than one
c. less than -1
d. None of these alternatives is correct.
ANS: B PTS: 1 TOP: Regression Analysis

44. If two variables, x and y, have a strong linear relationship, then

a. there may or may not be any causal relationship between x and y
b. x causes y to happen
c. y causes x to happen
d. None of these alternatives is correct.
ANS: A PTS: 1 TOP: Regression Analysis

45. If the coefficient of determination is 0.81, the coefficient of correlation

a. is 0.6561
b. could be either + 0.9 or - 0.9
c. must be positive
d. must be negative
ANS: B PTS: 1 TOP: Regression Analysis

46. A least squares regression line

a. may be used to predict a value of y if the corresponding x value is given
b. implies a cause-effect relationship between x and y
c. can only be determined if a good linear relationship exists between x and y
d. None of these alternatives is correct.
 ANS: A PTS: 1 TOP: Regression Analysis

47. If all the points of a scatter diagram lie on the least squares regression line, then the coefficient of
determination for these variables based on these data is
a. 0
b. 1
c. either 1 or -1, depending upon whether the relationship is positive or negative
d. could be any value between -1 and 1
ANS: B PTS: 1 TOP: Regression Analysis

48. If a data set has SSR = 400 and SSE = 100, then the coefficient of determination is
a. 0.10
b. 0.25
c. 0.40
d. 0.80
ANS: D PTS: 1 TOP: Regression Analysis

49. Compared to the confidence interval estimate for a particular value of y (in a linear regression model),
the interval estimate for an average value of y will be
a. narrower
b. wider
c. the same
d. None of these alternatives is correct.
ANS: A PTS: 1 TOP: Regression Analysis

50. A regression analysis between sales (in $1000) and price (in dollars) resulted in the following equation

= 60 - 8X

The above equation implies that an

a. increase of $1 in price is associated with a decrease of $8 in sales
b. increase of $8 in price is associated with an decrease of $52,000 in sales
c. increase of $1 in price is associated with a decrease of $52 in sales
d. increase of $1 in price is associated with a decrease of $8000 in sales
ANS: D PTS: 1 TOP: Regression Analysis

51. In a regression analysis if SST = 500 and SSE = 300, then the coefficient of determination is
a. 0.20
b. 1.67
c. 0.60
d. 0.40
ANS: D PTS: 1 TOP: Regression Analysis

52. Regression analysis was applied between sales (in $1000) and advertising (in $100) and the following
regression function was obtained.

= 500 + 4 X

Based on the above estimated regression line if advertising is $10,000, then the point estimate for sales
(in dollars) is
 a. $900
b. $900,000
c. $40,500
d. $505,000
ANS: B PTS: 1 TOP: Regression Analysis

53. The coefficient of correlation

a. is the square of the coefficient of determination
b. is the square root of the coefficient of determination
c. is the same as r-square
d. can never be negative
ANS: B PTS: 1 TOP: Regression Analysis

54. If the coefficient of correlation is 0.4, the percentage of variation in the dependent variable explained
by the variation in the independent variable
a. is 40%
b. is 16%.
c. is 4%
d. can be any positive value
ANS: B PTS: 1 TOP: Regression Analysis

55. In regression analysis if the dependent variable is measured in dollars, the independent variable
a. must also be in dollars
b. must be in some units of currency
c. can be any units
d. cannot be in dollars
ANS: C PTS: 1 TOP: Regression Analysis

56. If there is a very strong correlation between two variables then the coefficient of determination must be
a. much larger than 1, if the correlation is positive
b. much smaller than -1, if the correlation is negative
c. any value larger than 1
d. None of these alternatives is correct.
ANS: D PTS: 1 TOP: Regression Analysis

57. If the coefficient of correlation is 0.90, then the coefficient of determination

a. is also 0.9
b. is either 0.81 or -0.81
c. can be either negative or positive
d. must be 0.81
ANS: D PTS: 1 TOP: Regression Analysis

58. A regression analysis between demand (Y in 1000 units) and price (X in dollars) resulted in the
following equation

= 9 - 3X

The above equation implies that if the price is increased by $1, the demand is expected to
a. increase by 6 units
b. decrease by 3 units
 c. decrease by 6,000 units
d. decrease by 3,000 units
ANS: D PTS: 1 TOP: Regression Analysis

59. In a regression analysis if SST = 4500 and SSE = 1575, then the coefficient of determination is
a. 0.35
b. 0.65
c. 2.85
d. 0.45
ANS: B PTS: 1 TOP: Regression Analysis

60. Regression analysis was applied between sales (in $10,000) and advertising (in $100) and the
following regression function was obtained.

= 50 + 8 X

Based on the above estimated regression line if advertising is $1,000, then the point estimate for sales
(in dollars) is
a. $8,050
b. $130
c. $130,000
d. $1,300,000
ANS: D PTS: 1 TOP: Regression Analysis

61. If the coefficient of correlation is a positive value, then

a. the intercept must also be positive
b. the coefficient of determination can be either negative or positive, depending on the value
of the slope
c. the regression equation could have either a positive or a negative slope
d. the slope of the line must be positive
ANS: D PTS: 1 TOP: Regression Analysis

62. If the coefficient of determination is 0.9, the percentage of variation in the dependent variable
explained by the variation in the independent variable
a. is 0.90%
b. is 90%.
c. is 81%
d. 0.81%
ANS: B PTS: 1 TOP: Regression Analysis

63. Regression analysis was applied between sales (Y in $1,000) and advertising (X in $100), and the
following estimated regression equation was obtained.

= 80 + 6.2 X

Based on the above estimated regression line, if advertising is $10,000, then the point estimate for
sales (in dollars) is
a. $62,080
b. $142,000
c. $700
 d. $700,000
ANS: D PTS: 1 TOP: Regression Analysis

Exhibit 14 - 1
The following information regarding a dependent variable (Y) and an independent variable (X) is
provided.

Y X
4 2
3 1
4 4
6 3
8 5

SSE = 6
SST = 16

64. Refer to Exhibit 14-1. The least squares estimate of the Y intercept is
a. 1
b. 2
c. 3
d. 4
ANS: B PTS: 1 TOP: Regression Analysis

65. Refer to Exhibit 14-1. The least squares estimate of the slope is
a. 1
b. 2
c. 3
d. 4
ANS: A PTS: 1 TOP: Regression Analysis

66. Refer to Exhibit 14-1. The coefficient of determination is

a. 0.7096
b. - 0.7906
c. 0.625
d. 0.375
ANS: C PTS: 1 TOP: Regression Analysis

67. Refer to Exhibit 14-1. The coefficient of correlation is

a. 0.7906
b. - 0.7906
c. 0.625
d. 0.375
ANS: A PTS: 1 TOP: Regression Analysis

68. Refer to Exhibit 14-1. The MSE is

a. 1
b. 2
c. 3
d. 4
 ANS: B PTS: 1 TOP: Regression Analysis

Exhibit 14-2
You are given the following information about y and x.

y x
Dependent Variable Independent Variable
5 1
4 2
3 3
2 4
1 5

69. Refer to Exhibit 14-2. The least squares estimate of b1 (slope) equals
a. 1
b. -1
c. 6
d. 5
ANS: B PTS: 1 TOP: Regression Analysis

70. Refer to Exhibit 14-2. The least squares estimate of b0 (intercept)equals

a. 1
b. -1
c. 6
d. 5
ANS: C PTS: 1 TOP: Regression Analysis

71. Refer to Exhibit 14-2. The point estimate of y when x = 10 is

a. -10
b. 10
c. -4
d. 4
ANS: C PTS: 1 TOP: Regression Analysis

72. Refer to Exhibit 14-2. The sample correlation coefficient equals

a. 0
b. +1
c. -1
d. -0.5
ANS: C PTS: 1 TOP: Regression Analysis

73. Refer to Exhibit 14-2. The coefficient of determination equals

a. 0
b. -1
c. +1
d. -0.5
ANS: C PTS: 1 TOP: Regression Analysis

Exhibit 14-3
You are given the following information about y and x.
 y x
Dependent Variable Independent Variable
12 4
3 6
7 2
6 4

74. Refer to Exhibit 14-3. The least squares estimate of b1 equals

a. 1
b. -1
c. -11
d. 11
ANS: B PTS: 1 TOP: Regression Analysis

75. Refer to Exhibit 14-3. The least squares estimate of b0 equals

a. 1
b. -1
c. -11
d. 11
ANS: D PTS: 1 TOP: Regression Analysis

76. Refer to Exhibit 14-3. The sample correlation coefficient equals

a. -0.4364
b. 0.4364
c. -0.1905
d. 0.1905
ANS: A PTS: 1 TOP: Regression Analysis

77. Refer to Exhibit 14-3. The coefficient of determination equals

a. -0.4364
b. 0.4364
c. -0.1905
d. 0.1905
ANS: D PTS: 1 TOP: Regression Analysis

Exhibit 14-4
Regression analysis was applied between sales data (Y in $1,000s) and advertising data (x in $100s)
and the following information was obtained.

= 12 + 1.8 x

n = 17
SSR = 225
SSE = 75
Sb1 = 0.2683

78. Refer to Exhibit 14-4. Based on the above estimated regression equation, if advertising is $3,000, then
the point estimate for sales (in dollars) is
a. $66,000
b. $5,412
 c. $66
d. $17,400
ANS: A PTS: 1 TOP: Regression Analysis

79. Refer to Exhibit 14-4. The F statistic computed from the above data is
a. 3
b. 45
c. 48
d. 50
ANS: B PTS: 1 TOP: Regression Analysis

80. Refer to Exhibit 14-4. To perform an F test, the p-value is

a. less than .01
b. between .01 and .025
c. between .025 and .05
d. between .05 and 0.1
ANS: D PTS: 1 TOP: Regression Analysis

81. Refer to Exhibit 14-4. The t statistic for testing the significance of the slope is
a. 1.80
b. 1.96
c. 6.708
d. 0.555
ANS: C PTS: 1 TOP: Regression Analysis

82. Refer to Exhibit 14-4. The critical t value for testing the significance of the slope at 95% confidence is
a. 1.753
b. 2.131
c. 1.746
d. 2.120
ANS: B PTS: 1 TOP: Regression Analysis

Exhibit 14-5
The following information regarding a dependent variable (Y) and an independent variable (X) is
provided.

Y X
1 1
2 2
3 3
4 4
5 5

83. Refer to Exhibit 14-5. The least squares estimate of the Y intercept is
a. 1
b. 0
c. -1
d. 3
ANS: B PTS: 1 TOP: Regression Analysis
84. Refer to Exhibit 14-5. The least squares estimate of the slope is
a. 1
b. -1
c. 0
d. 3
ANS: A PTS: 1 TOP: Regression Analysis

85. Refer to Exhibit 14-5. The coefficient of correlation is

a. 0
b. -1
c. 0.5
d. 1
ANS: D PTS: 1 TOP: Regression Analysis

86. Refer to Exhibit 14-5. The coefficient of determination is

a. 0
b. -1
c. 0.5
d. 1
ANS: D PTS: 1 TOP: Regression Analysis

87. Refer to Exhibit 14-5. The MSE is

a. 0
b. -1
c. 1
d. 0.5
ANS: A PTS: 1 TOP: Regression Analysis

Exhibit 14-6
For the following data the value of SSE = 0.4130.

y x
Dependent Variable Independent Variable
15 4
17 6
23 2
17 4

88. Refer to Exhibit 14-6. The slope of the regression equation is

a. 18
b. 24
c. 0.707
d. -1.5
ANS: D PTS: 1 TOP: Regression Analysis

89. Refer to Exhibit 14-6. The y intercept is

a. -1.5
b. 24
c. 0.50
d. -0.707
 ANS: B PTS: 1 TOP: Regression Analysis

90. Refer to Exhibit 14-6. The total sum of squares (SST) equals
a. 36
b. 18
c. 9
d. 1296
ANS: A PTS: 1 TOP: Regression Analysis

91. Refer to Exhibit 14-6. The coefficient of determination (r2) equals

a. 0.7071
b. -0.7071
c. 0.5
d. -0.5
ANS: C PTS: 1 TOP: Regression Analysis

Exhibit 14-7
You are given the following information about y and x.

y x
Dependent Variable Independent Variable
5 4
7 6
9 2
11 4

92. Refer to Exhibit 14-7. The least squares estimate of b1 (slope) equals
a. -10
b. 10
c. 0.5
d. -0.5
ANS: D PTS: 1 TOP: Regression Analysis

93. Refer to Exhibit 14-7. The least squares estimate of b0 (intercept) equals
a. -10
b. 10
c. 0.5
d. -0.5
ANS: B PTS: 1 TOP: Regression Analysis

94. Refer to Exhibit 14-7. The sample correlation coefficient equals

a. 0.3162
b. -0.3162
c. 0.10
d. -0.10
ANS: B PTS: 1 TOP: Regression Analysis

95. Refer to Exhibit 14-7. The coefficient of determination equals

a. 0.3162
b. -0.3162
 c. 0.10
d. -0.10
ANS: C PTS: 1 TOP: Regression Analysis

Exhibit 14-8
The following information regarding a dependent variable Y and an independent variable X is
provided

X = 90  (Y - )(X - ) = -156
Y = 340  (X - )2 = 234
n=4  (Y - )2 = 1974
SSR = 104

96. Refer to Exhibit 14-8. The total sum of squares (SST) is

a. -156
b. 234
c. 1870
d. 1974
ANS: D PTS: 1 TOP: Regression Analysis

97. Refer to Exhibit 14-8. The sum of squares due to error (SSE) is
a. -156
b. 234
c. 1870
d. 1974
ANS: C PTS: 1 TOP: Regression Analysis

98. Refer to Exhibit 14-8. The mean square error (MSE) is

a. 1870
b. 13
c. 1974
d. 935
ANS: D PTS: 1 TOP: Regression Analysis

99. Refer to Exhibit 14-8. The slope of the regression equation is

a. -0.667
b. 0.667
c. 100
d. -100
ANS: A PTS: 1 TOP: Regression Analysis

100. Refer to Exhibit 14-8. The Y intercept is

a. -0.667
b. 0.667
c. 100
d. -100
ANS: C PTS: 1 TOP: Regression Analysis

101. Refer to Exhibit 14-8. The coefficient of correlation is

 a. -0.2295
b. 0.2295
c. 0.0527
d. -0.0572
ANS: A PTS: 1 TOP: Regression Analysis

Exhibit 14-9
A regression and correlation analysis resulted in the following information regarding a dependent
variable (y) and an independent variable (x).

X = 90  (Y - )(X - ) = 466
Y = 170  (X - )2 = 234
n = 10  (Y - )2 = 1434
SSE = 505.98

102. Refer to Exhibit 14-9. The least squares estimate of b1 equals

a. 0.923
b. 1.991
c. -1.991
d. -0.923
ANS: B PTS: 1 TOP: Regression Analysis

103. Refer to Exhibit 14-9. The least squares estimate of b0 equals

a. 0.923
b. 1.991
c. -1.991
d. -0.923
ANS: D PTS: 1 TOP: Regression Analysis

104. Refer to Exhibit 14-9. The sum of squares due to regression (SSR) is
a. 1434
b. 505.98
c. 50.598
d. 928.02
ANS: D PTS: 1 TOP: Regression Analysis

105. Refer to Exhibit 14-9. The sample correlation coefficient equals

a. 0.8045
b. -0.8045
c. 0
d. 1
ANS: A PTS: 1 TOP: Regression Analysis

106. Refer to Exhibit 14-9. The coefficient of determination equals

a. 0.6472
b. -0.6472
c. 0
d. 1
ANS: A PTS: 1 TOP: Regression Analysis
 Exhibit 14-10
The following information regarding a dependent variable Y and an independent variable X is
provided.

X = 16  (X - )(Y - ) = -8
Y = 28  (X - )2 = 8
n=4 SST = 42
SSE = 34

107. Refer to Exhibit 14-10. The slope of the regression function is

a. -1
b. 1.0
c. 11
d. 0.0
ANS: A PTS: 1 TOP: Regression Analysis

108. Refer to Exhibit 14-10. The Y intercept is

a. -1
b. 1.0
c. 11
d. 0.0
ANS: C PTS: 1 TOP: Regression Analysis

109. Refer to Exhibit 14-10. The coefficient of determination is

a. 0.1905
b. -0.1905
c. 0.4364
d. -0.4364
ANS: A PTS: 1 TOP: Regression Analysis

110. Refer to Exhibit 14-10. The coefficient of correlation is

a. 0.1905
b. -0.1905
c. 0.4364
d. -0.4364
ANS: D PTS: 1 TOP: Regression Analysis

111. Refer to Exhibit 14-10. The MSE is

a. 17
b. 8
c. 34
d. 42
ANS: A PTS: 1 TOP: Regression Analysis

112. Refer to Exhibit 14-10. The point estimate of Y when X = 3 is

a. 11
b. 14
c. 8
d. 0
 ANS: C PTS: 1 TOP: Regression Analysis

113. Refer to Exhibit 14-10. The point estimate of Y when X = -3 is

a. 11
b. 14
c. 8
d. 0
ANS: B PTS: 1 TOP: Regression Analysis

PROBLEM

1. Assume you have noted the following prices for books and the number of pages that each book
contains.

Book Pages (x) Price (y)

A 500 $7.00
B 700 7.50
C 750 9.00
D 590 6.50
E 540 7.50
F 650 7.00
G 480 4.50

a. Develop a least-squares estimated regression line.

b. Compute the coefficient of determination and explain its meaning.
c. Compute the correlation coefficient between the price and the number of pages. Test to see if
x and y are related. Use  = 0.10.

ANS:
a. = 1.0416 + 0.0099x
2
b. r = .5629; the regression equation has accounted for 56.29% of the total sum of squares
c. rxy = 0.75
t = 2.54 > 2.015 (df = 5); p-value is between .05 and 0.1; (Excel’s results: p-value of 0.052);
reject Ho, and conclude x and y are related

PTS: 1 TOP: Regression Analysis

2. Assume you have noted the following prices for books and the number of pages that each book
contains.

Book Pages (x) Price (y)

A 500 $7.00
B 700 7.50
C 750 9.00
D 590 6.50
E 540 7.50
F 650 7.00
G 480 4.50

a. Perform an F test and determine if the price and the number of pages of the books are related.
Let  = 0.01.
 b. Perform a t test and determine if the price and the number of pages of the books are related.
Let  = 0.01.
c. Develop a 90% confidence interval for estimating the average price of books that contain 800
pages.
d. Develop a 90% confidence interval to estimate the price of a specific book that has 800 pages.

ANS:
a. F = 6.439 < 16.26; p-value is between 0.1 and 0.2
(Excel’s result: p-value = .052); do not reject Ho; conclude x and y are not related
b. t = 2.5376 < 4.032; p-value is between 0.1 and 0.2.
(Excel’s result: p-value = .052); do not reject Ho; conclude x and y are not related
c. $7.29 to $10.63 (rounded)
d. $5.62 to $12.31 (rounded)

PTS: 1 TOP: Regression Analysis

3. The following data represent the number of flash drives sold per day at a local computer shop and their
prices.

Price (x) Units Sold (y)

$34 3
36 4
32 6
35 5
30 9
38 2
40 1

a. Develop a least-squares regression line and explain what the slope of the line indicates.
b. Compute the coefficient of determination and comment on the strength of relationship between
x and y.
c. Compute the sample correlation coefficient between the price and the number of flash drives
sold. Use = 0.01 to test the relationship between x and y.

ANS:
a. = 29.7857 - 0.7286x
The slope indicates that as the price goes up by $1, the number of units sold goes down by
0.7286 units.
b. r 2 = .8556; the regression equation has accounted for 85.56% of the total sum of squares
c. rxy = -0.92
t = -5.44 < -4.032 (df = 5); p-value  .01; (Excel’s result: p-value = .0028); reject Ho, and
conclude x and y are related

PTS: 1 TOP: Regression Analysis

4. The following data represent the number of flash drives sold per day at a local computer shop and their
prices.

Price (x) Units Sold (y)

$3.4 3
3.6 4
3.2 6
 3.5 5
3.0 9
3.8 2
4.0 1

a. Perform an F test and determine if the price and the number of flash drives sold are related.
Let  = 0.01.
b. Perform a t test and determine if the price and the number of flash drives sold are related. Let
 = 0.01.

ANS:
a. F = 29.624 > 16.26; p-value  .01; (Excel’s result: p-value = .0028); reject Ho, x and y are
related
b. t = -5.4428 < -4.032; p-value  .01; (Excel’s result: p-value = .0028); reject Ho, x and y are
related

PTS: 1 TOP: Regression Analysis

5. Shown below is a portion of an Excel output for regression analysis relating Y (dependent variable)
and X (independent variable).

ANOVA
df SS
Regression 1 110
Residual 8 74
Total 9 184

Coefficients Standard Error

Intercept 39.222 5.943
x -0.5556 0.1611

a. What has been the sample size for the above?

b. Perform a t test and determine whether or not X and Y are related. Let  = 0.05.
c. Perform an F test and determine whether or not X and Y are related. Let  = 0.05.
d. Compute the coefficient of determination.
e. Interpret the meaning of the value of the coefficient of determination that you found in d. Be
very specific.

ANS:
a through d

Summary Output

Regression Statistics
Multiple R 0.7732
R Square 0.5978
Adjusted R Square 0.5476
Standard Error 3.0414
Observations 10

ANOVA
df SS MS F Significance F
Regression 1 110 110 11.892 0.009
 Residual 8 74 9.25
Total 9 184

Coefficients Standard Error t Stat P-value

Intercept 39.222 5.942 6.600 0.000
x -0.556 0.161 -3.448 0.009

e. 59.783% of the variability in Y is explained by the variability in X.

PTS: 1 TOP: Regression Analysis

6. Shown below is a portion of a computer output for regression analysis relating Y (dependent variable)
and X (independent variable).

ANOVA
df SS
Regression 1 24.011
Residual 8 67.989

Coefficients Standard Error

Intercept 11.065 2.043
x -0.511 0.304

a. What has been the sample size for the above?

b. Perform a t test and determine whether or not X and Y are related. Let  = 0.05.
c. Perform an F test and determine whether or not X and Y are related. Let  = 0.05.
d. Compute the coefficient of determination.
e. Interpret the meaning of the value of the coefficient of determination that you found in d. Be
very specific.

ANS:
a through d

Summary Output

Regression Statistics
Multiple R 0.511
R Square 0.261
Adjusted R Square 0.169
Standard Error 2.915
Observations 10

ANOVA
df SS MS F Significance F
Regression 1 24.011 24.011 2.825 0.131
Residual 8 67.989 8.499
Total 9 92

Coefficients Standard Error t Stat P-value

Intercept 11.065 2.043 5.415 0.001
x -0.511 0.304 -1.681 0.131
 e. 26.1% of the variability in Y is explained by the variability in X.

PTS: 1 TOP: Regression Analysis

7. Part of an Excel output relating X (independent variable) and Y (dependent variable) is shown below.
Fill in all the blanks marked with "?".

Summary Output

Regression Statistics
Multiple R 0.1347
R Square ?
Adjusted R Square ?
Standard Error 3.3838
Observations ?

ANOVA
df SS MS F Significance F
Regression ? 2.7500 ? ? 0.632
Residual ? ? 11.45
Total 14 ?

Coefficients Standard Error t Stat P-value

Intercept 8.6 2.2197 ? 0.0019
x 0.25 0.5101 ? 0.632

ANS:

Summary Output

Regression Statistics
Multiple R 0.1347
R Square 0.0181
Adjusted R Square -0.0574
Standard Error 3.384
Observations 15

ANOVA
df SS MS F Significance F
Regression 1 2.750 2.75 0.2402 0.6322
Residual 13 148.850 11.45
Total 14 151.600

Coefficients Standard Error t Stat p-value

Intercept 8.6 2.2197 3.8744 0.0019
x 0.25 0.5101 0.4901 0.6322

PTS: 1 TOP: Regression Analysis

8. Shown below is a portion of a computer output for a regression analysis relating Y (dependent
variable) and X (independent variable).
 ANOVA
df SS
Regression 1 115.064
Residual 13 82.936
Total

Coefficients Standard Error

Intercept 15.532 1.457
x -1.106 0.261

a. Perform a t test using the p-value approach and determine whether or not Y and X are related.
Let  = 0.05.
b. Using the p-value approach, perform an F test and determine whether or not X and Y are
related.
c. Compute the coefficient of determination and fully interpret its meaning. Be very specific.

ANS:
a and b

Summary Output

Regression Statistics
Multiple R 0.7623
R Square 0.5811
Adjusted R Square 0.5489
Standard Error 2.5258
Observations 15

ANOVA
df SS MS F Significance F
Regression 1 115.064 115.064 18.036 0.001
Residual 13 82.936 6.380
Total 14 198

Coefficients Standard Error t Stat P-value

Intercept 15.532 1.457 10.662 0.000
x -1.106 0.261 -4.247 0.001

c. 58.11% of the variability in Y is explained by the variability in X.

PTS: 1 TOP: Regression Analysis

9. Part of an Excel output relating X (independent variable) and Y (dependent variable) is shown below.
Fill in all the blanks marked with "?".

Summary Output

Regression Statistics
Multiple R ?
R Square 0.5149
Adjusted R Square ?
Standard Error 7.3413
Observations 11
 ANOVA
df SS MS F Significance F
Regression ? ? ? ? 0.0129
Residual ? ? ?
Total ? 1000

Coefficients Standard Error t Stat P-value

Intercept ? 29.4818 3.7946 0.0043
x ? 0.7000 -3.0911 0.0129

ANS:

Summary Output

Regression Statistics
Multiple R 0.7176
R Square 0.5149
Adjusted R Square 0.4611
Standard Error 7.3413
Observations 11

ANOVA
df SS MS F Significance F
Regression 1 514.9455 514.9455 9.5546 0.0129
Residual 9 485.0545 53.8949
Total 10 1000.0000

Coefficients Standard Error t Stat P-value

Intercept 111.8727 29.4818 3.7946 0.0043
x -2.1636 0.7000 -3.0911 0.0129

PTS: 1 TOP: Regression Analysis

10. Shown below is a portion of a computer output for a regression analysis relating Y (demand) and X
(unit price).

ANOVA
df SS
Regression 1 5048.818
Residual 46 3132.661
Total 47 8181.479

Coefficients Standard Error

Intercept 80.390 3.102
X -2.137 0.248

a. Perform a t test and determine whether or not demand and unit price are related. Let  = 0.05.
b. Perform an F test and determine whether or not demand and unit price are related. Let  =
0.05.
c. Compute the coefficient of determination and fully interpret its meaning. Be very specific.
d. Compute the coefficient of correlation and explain the relationship between demand and unit
 price.

ANS:
a and b

Summary Output

Regression Statistics
Multiple R 0.786
R Square 0.617
Adjusted R Square 0.609
Standard Error 8.252
Observations 48

ANOVA
df SS MS F Significance F
Regression 1 5048.818 5048.818 74.137 0.000
Residual 46 3132.661 68.101
Total 47 8181.479

Coefficients Standard Error t Stat P-value

Intercept 80.390 3.102 25.916 0.000
X -2.137 0.248 -8.610 0.000

c. R2 = 0.617; 61.7% of the variability in demand is explained by the variability in price.

d. R = -0.786; since the slope is negative, the coefficient of correlation is also negative, indicating
that as unit price increases demand decreases.

PTS: 1 TOP: Regression Analysis

11. Shown below is a portion of a computer output for a regression analysis relating supply (Y in
thousands of units) and unit price (X in thousands of dollars).

ANOVA
df SS
Regression 1 354.689
Residual 39 7035.262

Coefficients Standard Error

Intercept 54.076 2.358
X 0.029 0.021

a. What has been the sample size for this problem?

b. Perform a t test and determine whether or not supply and unit price are related. Let  = 0.05.
c. Perform and F test and determine whether or not supply and unit price are related. Let  =
0.05.
d. Compute the coefficient of determination and fully interpret its meaning. Be very specific.
e. Compute the coefficient of correlation and explain the relationship between supply and unit
price.
f. Predict the supply (in units) when the unit price is $50,000.

ANS:
a through c
 Regression Statistics
Multiple R 0.219
R Square 0.048
Adjusted R Square 0.024
Standard Error 13.431
Observations 41

ANOVA
df SS MS F Significance F
Regression 1 354.689 354.689 1.966 0.169
Residual 39 7035.262 180.391
Total 40 7389.951

Coefficients Standard Error t Stat P-value

Intercept 54.076 2.358 22.938 0.000
X 0.029 0.021 1.402 0.169

d. R2 = 0.048; 4.8% of the variability in supply is explained by the variability in price.

e. R = 0.219; since the slope is positive, as unit price increases so does supply.
f. supply = 54.076 + .029(50) = 55.526 (55,526 units)

PTS: 1 TOP: Regression Analysis

12. Given below are four observations collected in a regression study on two variables x (independent
variable) and y (dependent variable).

x y
2 4
6 7
9 8
9 9

a. Develop the least squares estimated regression equation.

b. At 95% confidence, perform a t test and determine whether or not the slope is significantly
different from zero.
c. Perform an F test to determine whether or not the model is significant. Let  = 0.05.
d. Compute the coefficient of determination.

ANS:

Regression Statistics
Multiple R 0.977
R Square 0.955
Adjusted R Square 0.932
Standard Error 0.564
Observations 4

ANOVA
df SS MS F Significance F
Regression 1 13.364 13.364 42.000 0.023
Residual 2 0.636 0.318
Total 3 14
 Coefficients Standard Error t Stat P-value
Intercept 2.864 0.698 4.104 0.055
X 0.636 0.098 6.481 0.023

a. = 2.864 + 0.636x
b. p-value < .05; reject Ho
c. p-value < .05; reject Ho
d. 0.955

PTS: 1 TOP: Regression Analysis

13. Given below are five observations collected in a regression study on two variables, x (independent
variable) and y (dependent variable).

x y
2 4
3 4
4 3
5 2
6 1

a. Develop the least squares estimated regression equation.

b. At 95% confidence, perform a t test and determine whether or not the slope is significantly
different from zero.
c. Perform an F test to determine whether or not the model is significant. Let  = 0.05.
d. Compute the coefficient of determination.
e. Compute the coefficient of correlation.

ANS:

Regression Statistics
Multiple R 0.970
R Square 0.941
Adjusted R Square 0.922
Standard Error 0.365
Observations 5

ANOVA
df SS MS F Significance F
Regression 1 6.4 6.400 48.000 0.006
Residual 3 0.4 0.133
Total 4 6.8

Coefficients Standard Error t Stat P-value

Intercept 6.000 0.490 12.247 0.001
X -0.800 0.115 -6.928 0.006

a. = 6 - 0.8 x
b. p-value < .05; reject Ho
c. p-value < .05; reject Ho
d. 0.941
e. -0.970
 PTS: 1 TOP: Regression Analysis

14. Below you are given a partial computer output based on a sample of 8 observations, relating an
independent variable (x) and a dependent variable (y).

Coefficient Standard Error

Intercept 13.251 10.77
X 0.803 0.385

Analysis of Variance

SOURCE SS
Regression
Error (Residual) 41.674
Total 71.875

a. Develop the estimated regression line.

b. At  = 0.05, test for the significance of the slope.
c. At  = 0.05, perform an F test.
d. Determine the coefficient of determination.

ANS:

a. = 13.251 + 0.803x
b. t = 2.086; p-value is between .05 and .1 (critical t = 2.447); do not reject Ho
c. F = 4.348; p-value is between .05 and .1 (critical F = 5.99); do not reject Ho
d. 0.42

PTS: 1 TOP: Regression Analysis

15. Below you are given a partial computer output based on a sample of 8 observations, relating an
independent variable (x) and a dependent variable (y).

Coefficient Standard Error

Intercept -9.462 7.032
x 0.769 0.184

Analysis of Variance

SOURCE SS
Regression 400
Error (Residual) 138

a. Develop the estimated regression line.

b. At  = 0.05, test for the significance of the slope.
c. At  = 0.05, perform an F test.
d. Determine the coefficient of determination.

ANS:

a. = -9.462 + 0.769x
b. t = 4.17; p-value (actual p-value using Excel = 0.0059) < .05; reject Ho
 c. F = 17.39; p-value (actual p-value using Excel = 0.0059) < .05; reject Ho
d. 0.743

PTS: 1 TOP: Regression Analysis

16. The following data represent a company's yearly sales volume and its advertising expenditure over a
period of 8 years.

(Y) (X)
Sales in Advertising
Millions of Dollars in ($10,000)
15 32
16 33
18 35
17 34
16 36
19 37
19 39
24 42

a. Develop a scatter diagram of sales versus advertising and explain what it shows regarding the
relationship between sales and advertising.
b. Use the method of least squares to compute an estimated regression line between sales and
advertising.
c. If the company's advertising expenditure is $400,000, what are the predicted sales? Give the
answer in dollars.
d. What does the slope of the estimated regression line indicate?
e. Compute the coefficient of determination and fully interpret its meaning.
f. Use the F test to determine whether or not the regression model is significant at  = 0.05.
g. Use the t test to determine whether the slope of the regression model is significant at  = 0.05.
h. Develop a 95% confidence interval for predicting the average sales for the years when
$400,000 was spent on advertising.
i. Compute the correlation coefficient.

ANS:

a.
 The scatter diagram shows a positive relation between sales and advertising.

b. = -10.42 + 0.7895X
c. $21,160,000
d. As advertising is increased by $10,000, sales are expected to increase by $789,500.
e. 0.8459; 84.59% of variation in sales is explained by variation in advertising
f. F = 32.93; p-value (actual p-value using Excel = 0.0012) < .05; reject Ho; it is significant
(critical F = 5.99)
g. t = 5.74; p-value (actual p-value using Excel = 0.0012) < .05; reject Ho; significant (critical t =
2.447)
h. $19,460,000 to $22,860,000
i. 0.9197

PTS: 1 TOP: Regression Analysis

17. Given below are five observations collected in a regression study on two variables x (independent
variable) and y (dependent variable).

x y
10 7
20 5
30 4
40 2
50 1

a. Develop the least squares estimated regression equation

b. At 95% confidence, perform a t test and determine whether or not the slope is significantly
different from zero.
c. Perform an F test to determine whether or not the model is significant. Let  = 0.05.
d. Compute the coefficient of determination.
e. Compute the coefficient of correlation.

ANS:

a. = 8.3 - 0.15x
b. t = -15; p-value (actual p-value using Excel = 0.0001) < .05; reject Ho (critical t = 3.18)
c. F = 225; p-value (actual p-value using Excel = 0.0001) < .05; reject Ho (critical F = 10.13)
d. 0.9868
e. 0.9934

PTS: 1 TOP: Regression Analysis

18. Below you are given a partial computer output based on a sample of 14 observations, relating an
independent variable (x) and a dependent variable (y).

Predictor Coefficient Standard Error

Constant 6.428 1.202
X 0.470 0.035

Analysis of Variance

SOURCE SS
Regression 958.584
 Error (Residual)
Total 1021.429

a. Develop the estimated regression line.

b. At  = 0.05, test for the significance of the slope.
c. At  = 0.05, perform an F test.
d. Determine the coefficient of determination.
e. Determine the coefficient of correlation.

ANS:

a. = 6.428 + 0.47x
b. t = 13.529; p-value (actual p-value using Excel = 0.0000) < .05; reject Ho (critical t = 2.179)
c. F = 183.04; p-value (actual p-value using Excel = 0.0000) < .05; reject Ho (critical F = 4.75)
d. 0.938
e. 0.968

PTS: 1 TOP: Regression Analysis

19. Below you are given a partial computer output based on a sample of 21 observations, relating an
independent variable (x) and a dependent variable (y).

Predictor Coefficient Standard Error

Constant 30.139 1.181
X -0.252 0.022

Analysis of Variance

SOURCE SS
Regression 1,759.481
Error 259.186

a. Develop the estimated regression line.

b. At  = 0.05, test for the significance of the slope.
c. At  = 0.05, perform an F test.
d. Determine the coefficient of determination.
e. Determine the coefficient of correlation.

ANS:

a. = 30.139 - 0.252X
b. t = -11.357; p-value (almost zero) <  = .05; reject Ho (critical t = 2.093)
c. F = 128.982; p-value (almost zero) <  = .05; reject Ho (critical F = 4.38)
d. 0.872
e. -0.934

PTS: 1 TOP: Regression Analysis

20. An automobile dealer wants to see if there is a relationship between monthly sales and the interest rate.
A random sample of 4 months was taken. The results of the sample are presented below. The estimated
least squares regression equation is
 = 75.061 - 6.254X

Y X
Monthly Sales Interest Rate (In Percent)
22 9.2
20 7.6
10 10.4
45 5.3

a. Obtain a measure of how well the estimated regression line fits the data.
b. You want to test to see if there is a significant relationship between the interest rate and
monthly sales at the 1% level of significance. State the null and alternative hypotheses.
c. At 99% confidence, test the hypotheses.
d. Construct a 99% confidence interval for the average monthly sales for all months with a 10%
interest rate.
e. Construct a 99% confidence interval for the monthly sales of one month with a 10% interest
rate.

ANS:

a. R2 = 0.8687
b. H0: 1 = 0
Ha: 1 0
c. test statistic t = -3.64; p-value is between .05 and .10 (critical t = 9.925); do not reject H0
d. -33.151 to 58.199; therefore, 0 to 58.199
e. -67.068 to 92.116; therefore, 0 to 92.116

PTS: 1 TOP: Regression Analysis

21. Jason believes that the sales of coffee at his coffee shop depend upon the weather. He has taken a
sample of 6 days. Below you are given the results of the sample.

Cups of Coffee Sold Temperature

350 50
200 60
210 70
100 80
60 90
40 100

a. Which variable is the dependent variable?

b. Compute the least squares estimated line.
c. Compute the correlation coefficient between temperature and the sales of coffee.
d. Is there a significant relationship between the sales of coffee and temperature? Use a .05 level
of significance. Be sure to state the null and alternative hypotheses.
e. Predict sales of a 90 degree day.

ANS:

a. Cups of coffee sold

b. = 605.714 - 5.943X
c. 0.95197
d. H0: 1 = 0
 Ha: 1 0
t = -6.218; p-value (actual p-value using Excel = 0.0034) <  = .05; reject Ho (critical t =
2.776)
e. 70.8 or 71 cups

PTS: 1 TOP: Regression Analysis

22. Researchers have collected data on the hours of television watched in a day and the age of a person.
You are given the data below.

Hours of Television Age

1 45
3 30
4 22
3 25
6 5

a. Determine which variable is the dependent variable.

b. Compute the least squares estimated line.
c. Is there a significant relationship between the two variables? Use a .05 level of significance. Be
sure to state the null and alternative hypotheses.
d. Compute the coefficient of determination. How would you interpret this value?

ANS:

a. Hours of Television
b. = 6.564 - 0.1246X
c. H0: 1 = 0
Ha: 1 0
t = -12.018; p-value (actual p-value using Excel = 0.0002) <  = .05; reject H0 (critical t =
3.18)
d. 0.98 (rounded); 98 % of variation in hours of watching television is explained by variation in
age.

PTS: 1 TOP: Regression Analysis

23. Given below are seven observations collected in a regression study on two variables, X (independent
variable) and Y (dependent variable).

X Y
2 12
3 9
6 8
7 7
8 6
7 5
9 2

a. Develop the least squares estimated regression equation.

b. At 95% confidence, perform a t test and determine whether or not the slope is significantly
different from zero.
c. Perform an F test to determine whether or not the model is significant. Let  = 0.05.
d. Compute the coefficient of determination.
 ANS:

a. = 13.75 -1.125X
b. t = -5.196; p-value (actual p-value using Excel = 0.0001) <  = .05; reject Ho (critical t =
2.571)
c. F = 27; p-value (actual p-value using Excel = 0.0001) <  = .05; reject Ho (critical F = 6.61)
d. 0.844

PTS: 1 TOP: Regression Analysis

24. The owner of a retail store randomly selected the following weekly data on profits and advertising
cost.

Week Advertising Cost ($) Profit ($)

1 0 200
2 50 270
3 250 420
4 150 300
5 125 325

a. Write down the appropriate linear relationship between advertising cost and profits. Which is
the dependent variable? Which is the independent variable?
b. Calculate the least squares estimated regression line.
c. Predict the profits for a week when $200 is spent on advertising.
d. At 95% confidence, test to determine if the relationship between advertising costs and profits is
statistically significant.
e. Calculate the coefficient of determination.

ANS:

a. E(Y) = 0 + 1X, where Y is profit and X is advertising cost

b. = 210.0676 + 0.80811X
c. $371.69
d. t = 6.496; p-value (actual p-value using Excel = 0.0013) <  = .05; reject Ho; relationship is
significant (critical t = 3.182)
e. 0.9336

PTS: 1 TOP: Regression Analysis

25. The owner of a bakery wants to analyze the relationship between the expenditure of a customer and the
customer's income. A sample of 5 customers is taken and the following information was obtained.

Y X
Expenditure Income (In Thousands)
.45 20
10.75 19
5.40 22
7.80 25
5.60 14

The least squares estimated line is = 4.348 + 0.0826 X.

a. Obtain a measure of how well the estimated regression line fits the data.
 b. You want to test to see if there is a significant relationship between expenditure and income at
the 5% level of significance. Be sure to state the null and alternative hypotheses.
c. Construct a 95% confidence interval estimate for the average expenditure for all customers
with an income of $20,000.
d. Construct a 95% confidence interval estimate for the expenditure of one customer whose
income is $20,000.

ANS:

a. R2 = 0.0079
b. H0: 1 = 0
Ha: 1 0
t = 0.154; p-value (actual p-value using Excel = 0.8871) >  = .05; do not reject H0; (critical t =
3.182)
c. 0.185 to 12.185
d. -9.151 to 21.151

PTS: 1 TOP: Regression Analysis

26. Below you are given information on annual income and years of college education.

Income (In Thousands) Years of College

28 0
40 3
36 2
28 1
48 4

a. Develop the least squares regression equation.

b. Estimate the yearly income of an individual with 6 years of college education.
c. Compute the coefficient of determination.
d. Use a t test to determine whether the slope is significantly different from zero. Let  = 0.05.
e. At 95% confidence, perform an F test and determine whether or not the model is significant.

ANS:

a. = 25.6 + 5.2X
b. $56,800
c. 0.939
d. t = 6.789; p-value (actual p-value using Excel = 0.0008) <  = .05; reject Ho; significant
(critical t = 3.182
e. F = 46.091; p-value (actual p-value using Excel = 0.0008) <  = .05; reject Ho; significant
(critical F = 10.13)

PTS: 1 TOP: Regression Analysis

27. Below you are given information on a woman's age and her annual expenditure on purchase of books.

Age Annual Expenditure ($)

18 210
22 180
21 220
28 280
 a. Develop the least squares regression equation.
b. Compute the coefficient of determination.
c. Use a t test to determine whether the slope is significantly different from zero. Let  = 0.05.
d. At 95% confidence, perform an F test and determine whether or not the model is significant.

ANS:

a. = 54.834 + 7.536X
2
b. R = 0.568
c. t = 1.621; p-value (actual p-value using Excel = 0.2464) >  = .05; do not reject Ho; not
significant (critical t = 4.303)
d. F = 2.628; p-value (actual p-value using Excel = 0.2464) >  = .05; do not reject Ho; not
significant (critical F = 18.51)

PTS: 1 TOP: Regression Analysis

28. The following sample data contains the number of years of college and the current annual salary for a
random sample of heavy equipment salespeople.

Annual Income
Years of College (In Thousands)
2 20
2 23
3 25
4 26
3 28
1 29
4 27
3 30
4 33
4 35

a. Which variable is the dependent variable? Which is the independent variable?

b. Determine the least squares estimated regression line.
c. Predict the annual income of a salesperson with one year of college.
d. Test if the relationship between years of college and income is statistically significant at the .05
level of significance.
e. Calculate the coefficient of determination.
f. Calculate the sample correlation coefficient between income and years of college. Interpret the
value you obtain.

ANS:

a. Y (dependent variable) is annual income and X (independent variable) is years of college

b. = 21.6 + 2X
c. $23,600
d. The relationship is not statistically significant since t = 1.51; p-value (actual p-value using
Excel = 0.1696) >  = .05 (critical t = 2.306)
e. 0.222
f. 0.471; there is a positive correlation between years of college and annual income

PTS: 1 TOP: Regression Analysis

29. The following data shows the yearly income (in $1,000) and age of a sample of seven individuals.

Income (in $1,000) Age

20 18
24 20
24 23
25 34
26 24
27 27
34 27

a. Develop the least squares regression equation.

b. Estimate the yearly income of a 30-year-old individual.
c. Compute the coefficient of determination.
d. Use a t test to determine whether the slope is significantly different from zero. Let  = 0.05.
e. At 95% confidence, perform an F test and determine whether or not the model is significant.

ANS:

a. = 16.204 + 0.3848X
b. $27,748
c. 0.2266
d. t = 1.21; p-value (actual p-value using Excel = 0.2803) >  = .05; not significant (critical t =
2.571)
e. F = 1.46; p-value (actual p-value using Excel = 0.2803) >  = .05; not significant (critical F =
6.61)

PTS: 1 TOP: Regression Analysis

30. The following data show the results of an aptitude test (Y) and the grade point average of 10 students.

Aptitude Test
Score (Y) GPA (X)
26 1.8
31 2.3
28 2.6
30 2.4
34 2.8
38 3.0
41 3.4
44 3.2
40 3.6
43 3.8

a. Develop a least squares estimated regression line.

b. Compute the coefficient of determination and comment on the strength of the regression
relationship.
c. Is the slope significant? Use a t test and let  = 0.05.
d. At 95% confidence, test to determine if the model is significant (i.e., perform an F test).

ANS:
 a. = 8.171 + 9.4564X
b. 0.83; there is a fairly strong relationship
c. t = 6.25; p-value (actual p-value using Excel = 0.0002) <  =.05; it is significant (critical t =
2.306)
d. F = 39.07; p-value (actual p-value using Excel = 0.0002) <  =.05; it is significant (critical F =
5.32)

PTS: 1 TOP: Regression Analysis

31. Shown below is a portion of the computer output for a regression analysis relating sales (Y in millions
of dollars) and advertising expenditure (X in thousands of dollars).

Predictor Coefficient Standard Error

Constant 4.00 0.800
X 0.12 0.045

Analysis of Variance

SOURCE DF SS
Regression 1 1,400
Error 18 3,600

a. What has been the sample size for the above?

b. Perform a t test and determine whether or not advertising and sales are related. Let  = 0.05.
c. Compute the coefficient of determination.
d. Interpret the meaning of the value of the coefficient of determination that you found in Part c.
Be very specific.
e. Use the estimated regression equation and predict sales for an advertising expenditure of
$4,000. Give your answer in dollars.

ANS:

a. 20
b. t = 2.66; p-value is between 0.01 and 0.02; they are related (critical t = 2.101)
c. R2 = 0.28
d. 28% of variation in sales is explained by variation in advertising expenditure.
e. $4,480,000

PTS: 1 TOP: Regression Analysis

32. A company has recorded data on the daily demand for its product (Y in thousands of units) and the
unit price (X in hundreds of dollars). A sample of 15 days demand and associated prices resulted in the
following data.

X = 75  (Y- )(X- ) = -59

Y = 135  (X- )2 = 94
 (Y- )2 = 100
SSE = 62.9681

a. Using the above information, develop the least-squares estimated regression line and write the
equation.
b. Compute the coefficient of determination.
 c. Perform an F test and determine whether or not there is a significant relationship between
demand and unit price. Let  = 0.05.
d. Would the demand ever reach zero? If yes, at what price would the demand be zero?

ANS:

a. = 12.138 - 0.6277X
b. R2 = 0.3703
c. F = 7.65; p-value is between .01 and .025; reject Ho and conclude that demand and unit price
are related (critical F = 4.67)
d. Yes, at $1,934

PTS: 1 TOP: Regression Analysis

33. A regression and correlation analysis resulted in the following information regarding an independent
variable (x) and a dependent variable (y).

X = 42  (Y - )(X - ) = 37
Y = 63  (X - )2 = 84
n=7  (Y - )2 = 28

a. Develop the least squares estimated regression equation.

b. At 95% confidence, perform a t test and determine whether or not the slope is significantly
different from zero.
c. Perform an F test to determine whether or not the model is significant. Let  = 0.05.
d. Compute the coefficient of determination.

ANS:

a. = 6.3571 + 0.4405x
b. p-value < .05; reject Ho
c. p-value < .05; reject Ho
d. 0.582

PTS: 1 TOP: Regression Analysis