Figure 3 shows Excel output estimating the following model M

Figure 3 shows Excel output estimating the following model:

MPG = ?0 + ?1Length + ?2Width + ?3Weight + ?4Japan+ ?

Where, MPG = miles per gallon, Length = length of the vehicle in inches, Width = width of the vehicle in inches, Weight = weight of the vehicle in pounds and Japan = dummy variable that is 1 if the vehicle was made in Japan and 0 if it was not made in Japan.

What is the lowest level of significance for which you would reject the null hypothesis that the variable Japan has no effect on MPG?

Select one:

a. 0.12

b. 0.05

c. 0.01

d. 0.20

19.

Refer to Figure 3

Interpret the effect of Weight on MPG?

Select one:

a. A 1 pound increase in a vehicle’s weight, causes the predicted miles per gallon to drop by 0.0041 miles.

b. A 0.0041 pound decrease in weight causes a 1 mile increase in miles per gallon.

c. Vehicles that have weight get 0.0041 miles per gallon less than vehicles that do not have weight.

d. A .41% increase in a vehicles weight, causes the predicted miles per gallon to decrease by 1 mile.

20.

Using the sample estimate b1, from Figure 3 what can we conclude about the value of the population parameter ?1?

Select one:

a. ?1 is significantly different from zero at the .05 level

b. ?1 is not significantly different from zero at the .05 level

c. ?1 is significantly different from zero at the .25 level

d. both b. and c. are correct

21.

Suppose you used Ordinary Least Squares (OLS) to estimate the effect ticket price (in dollars) has on the number of skiers at Appalachian Ski Mountain.

Which of the following is true?

Select one:

a. number of skiers is a dependent and endogenous variable

b. ticket price is endogenous

c. ticket price is an exogenous and dependent variable

d. ticket price is a dummy variable

e. both a and b are correct

22.

Using the Excel output obtained from running the OLS regression, suppose you formed the following: NumberSkiers = 400 – 2.5TicketPrice .

Given this sample regression function, predict the number of skiers at Appalachian Ski Mountain with a ticket price of $45.

Select one:

a. 200

b. 288

c. 198

d. 513

23.

Figure 4 shows Excel output estimating the following model:

HousingPrice = ?0 + ?1SqFeet + ?2LotSize + ?3Baths + ?4BathSinks + ?

Where, HousingPrice = the price of a home in thousands of dollars, SqFeet = square footage of the home, Lotsize = size of the lot in thousand square feet, Baths = number of bathrooms and BathSinks = number of bathroom sinks.

Which of the independent variables show signs of high correlation with one or more of the other independent variables (i.e., high multicolinearity)?

Select one:

a. Square Feet

b. Lot Size

c. Square Feet and Lot Size

d. Baths and BathSinks

e. BathSinks

24.

One of the problems resulting from highly correlated independent variables (multicolinearity) is:

Select one:

a. Deflated (low) standard errors on the coefficient estimates.

b. The p-values for the coefficient estimates are deflated (low).

c. The test statistics for the coefficient estimates will be deflated (low).

d. The overall fit of the model (r2) will be negatively affected.

25.

Suppose you used Excel to estimate the following model:

ATMTime= ?0 + ?1Age+ ?2Gender+ ?

Where, ATMTime = time it takes to complete an ATM transaction in seconds, Age = age of the customer in years, Gender = dummy variable that is 1 if the customer is male and 0 if the customer is female.

Suppose the 95% confidence interval around the parameter estimate for ?1 was calculated and had lower limit of 0.025 and an upper limit of 0.500.

Does Age significantly affect ATMTime at the 0.025 significance level?

Select one:

a. Yes

b. No

c. More information is required to answer this question

Solution

18.
What is the lowest level of significance for which you would reject the null hypothesis that the variable Japan has no effect on MPG?
Select one:

a. 0.12 [ANSWER]

As P = 0.1127, and P has to be less than the significance level, it has to be 0.12.   

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19.

Interpret the effect of Weight on MPG?
Select one:
a. A 1 pound increase in a vehicle’s weight, causes the predicted miles per gallon to drop by 0.0041 miles.

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20.
Using the sample estimate b1, from Figure 3 what can we conclude about the value of the population parameter 1?
Select one:

As P = 0.9311 is very big, then

b. 1 is not significantly different from zero at the .05 level [ANSWER]

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