Week 6 FIN 208

SCENARIO 12-2A candy bar manufacturer is interested in trying to estimate how sales are influenced by the price of their product. To do this, the company randomly chooses 6 small cities and offers the candy bar at different prices. Using candy bar sales as the dependent variable, the company will conduct a simple linear regression on the data below: City​Price ($)Sales River Falls1.30100 Hudson1.6090 Ellsworth1.8090 Prescott2.0040 Rock Elm2.4038 Stillwater2.9032 Referring to Scenario 12-2, what is the estimated mean change in the sales of the candy bar if price goes up by $1.00?

-48.193

SCENARIO 12-9It is believed that, the average numbers of hours spent studying per day (HOURS) during undergraduate education should have a positive linear relationship with the starting salary (SALARY, measured in thousands of dollars per month) after graduation. Given below is the Excel output for predicting starting salary (Y) using number of hours spent studying per day (X) for a sample of 51 students. NOTE: Only partial output is shown.Note: 2.051E - 05 = 2.051*10-05 and 5.944E - 18 = 5.944*10-18.Referring to Scenario 12-9, the estimated change in mean salary (in thousands of dollars) as a result of spending an extra hour per day studying is

0.9795

SCENARIO 12-3The director of cooperative education at a state college wants to examine the effect of cooperative education job experience on marketability in the work place. She takes a random sample of 4 students. For these 4, she finds out how many times each had a cooperative education job and how many job offers they received upon graduation. These data are presented in the table below. StudentCoopJobsJobOffer 114 226 313 401 Referring to Scenario 12-3, the least squares estimate of the Y-intercept is ________.

1.00

SCENARIO 12-4The managers of a brokerage firm are interested in finding out if the number of new clients a broker brings into the firm affects the sales generated by the broker. They sample 12 brokers and determine the number of new clients they have enrolled in the last year and their sales amounts in thousands of dollars. These data are presented in the table that follows. (Answer should be in 2 decimal points) BrokerClientsSales 12752 21137 34264 43355 51529 61534 72558 83659 92844 103048 111731 122238 Referring to Scenario 12-4, the least squares estimate of the slope is ________.

1.12

SCENARIO 12-4The managers of a brokerage firm are interested in finding out if the number of new clients a broker brings into the firm affects the sales generated by the broker. They sample 12 brokers and determine the number of new clients they have enrolled in the last year and their sales amounts in thousands of dollars. These data are presented in the table that follows. (Answer should be to 1 decimal point) BrokerClientsSales 12752 21137 34264 43355 51529 61534 72558 83659 92844 103048 111731 122238 Referring to Scenario 12-4, the least squares estimate of the Y-intercept is ________.

17.7

SCENARIO 12-3The director of cooperative education at a state college wants to examine the effect of cooperative education job experience on marketability in the work place. She takes a random sample of 4 students. For these 4, she finds out how many times each had a cooperative education job and how many job offers they received upon graduation. These data are presented in the table below. (Round up answer to 2 decimal points) StudentCoopJobsJobOffer 114 226 313 401 Referring to Scenario 12-3, the least squares estimate of the slope is ________. Answer:2.50

2.50

SCENARIO 12-1A large national bank charges local companies for using their services. A bank official reported the results of a regression analysis designed to predict the bank's charges (Y)—measured in dollars per month—for services rendered to local companies. One independent variable used to predict service charges to a company is the company's sales revenue (X)—measured in millions of dollars. Data for 21 companies who use the bank's services were used to fit the model:Yi = β0 + β1Xi + EiThe results of the simple linear regression are provided below. = -2,700 + 20X, SYX = 65, two-tail p-value = 0.034 (for testing β1) Referring to Scenario 12-1, interpret the estimate of β0, the Y-intercept of the line.

There is no practical interpretation since a sales revenue of $0 is a nonsensical value.

d

d

The Y-intercept (b0) represents the

estimated average Y when X = 0

The Y-intercept (b0) represents the

predicted value of Y when X = 0.

The slope (b1) represents

the estimated average change in Y per unit change in X.