Description
There are 2 parts , the first part has 5 multiple choice questions, the second part 2 story problems.
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Explanation & Answer
Hi there!Attached please find a Word document containing the complete solution to the 5 MC and both short-answer questions (with graphs and answers in full).Thanks again!Selenica
Please submit as a word document (preferred) or a pdf. No jpeg files will be accepted.
PAT 1: Multiple Choice Questions. Circle or highlight the one best answer.
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1. If a regression analysis of rent and square footage of the apartments produces an R2 of .46 and
an estimated coefficient for square footage of +1.2 with a T statistic of 4.56, the following
interpretation can be made:
a. This regression is able to explain the rent of the apartment 46% of the time and an
increase in size of the apartment by one square foot will increase rents by $1.20, but we
cannot reject the null hypothesis that the coefficient is equal to zero.
b. This regression is statistically insignificant and unreliable because the R2 is only.45 and
it must be .95 to be statistically significant at the 95% confidence interval.
c. This regression is able to explain about 46% of the variation of the rents with the
independent variable of square footage, increases in size of the apartment by one square
foot will increase rents by $1.20, the T statistic indicates that we can reject the null
hypothesis and thus are confident that this variable is statistically significant in
explaining the level of rents.
d. This regression indicates that rent and square footage of the apartment is only 46% of
the reason that people rent a particular apartment. The square footage coefficient
indicates that renters are willing to pay $120 more for an apartment with an additional
10 square feet. The T statistic indicates that 4.56 times out of ten this relationship will
be statistically significant.
e. One would need to know more about this regression and its output before one could
draw any conclusions about the relationship between rent and square footage.
2. Suppose a manager at McDonalds was making $45,000 per year but gave up his job in order to start
his own hamburger joint. He withdraws $60,000 from his retirement accou...