QAM II (Academic Year 2014-15)

Solution of Problem Set 3

(Instructor: Gaurav Garg)

1) Calculated Chi Square = 7.286535, Critical Chi Square at 1% level and 6 d.f. = 16.812;
Accept H0. The percentage distribution of the U.S. labor force by education attainment
has not changed since 1992.
2) H0: Given data follows Poisson distribution.
H0: Given data does not follow Poisson distribution.
= =1.94
1.94
X
f0
P(X=x)=
(1.94) fe=150*P(X=x)
!

0
1
2
3
4
5
Total
2 =

21
37
44
30
14
4
150

(0 ) 2

0.1437
0.2788
0.2704
0.1749
0.0848
0.0474
1

21.556
41.818
40.563
26.231
12.722
7.110
150

(0 ) 2

0.014
0.555
0.291
0.542
0.128
1.361
2.891

= 2.891

From the tables of 2 distribution with 6-1-1= 4 d.f. we have the critical value of
9.49 at 5% level of significance. Since 2 < 9.49 we cannot reject the null
hypothesis and conclude that the given data follows Poisson distribution.
3) Calculated Chi Square = 0.86482, Critical Chi Square at 2.5% level and 2 d.f. = 7.378;
Accept H0. The credit card holders in this state are not different from all credit card
holders with respect to making payments on their credit card bills.
4) Calculated Chi Square = 6.75, Critical Chi Square at 5% level and 4 d.f. = 9.488; Accept
H0. The null hypothesis that the orders are evenly distributed over the days of the
week is true.
5) After Pooling
Calculated Chi Square = 10.96. Test of Goodness of fit is considered as a right tailed
test. So p-value = P(2(7) > 10.96) = 1- 0.859627 =0.140373. Fix level of significance at
5%. H0: Data follows Poisson, H1: Data does not follow Poisson. Since p-value > 0.05,
we accept H0 at 5% level.
6) Calculated Chi Square = 10.11719, Critical Chi Square at 5% level and 5 d.f. = 11.0705;
Accept H0. The observed distribution of X may be defined by the probability () =
(1 )1, where p =1/2.
7) Calculated Chi Square = 19.5833, Critical Chi Square at 5% level and 2 d.f. = 5.991465;
Reject H0. Data is not consistent with the companys claim.

8)
Observed Frequencies
Employed
Unemployed
Male
1480
5720
Female
120
680
Total
1600
6400

Total
7200
800
8000

Calculated Chi Square = 13.8889, Critical Chi Square at 5% level and 1 d.f. = 3.8415;
Reject H0. We conclude that distinction is made in appointment on the basis of sex.
9) Calculated Chi Square = 128.448, Critical Chi Square at 5% level and 2 d.f. = 5.991465;
Reject H0. Three media sources do not have the same promotional impact on
customers.
10) Calculated Chi Square = 68.66277, Critical Chi Square at 5% level and 3 d.f. = 7.814728;
Reject H0. The percentage distribution of the opinions of the users of the redesigned
product is different from the percentage distribution of the users of this product
before it was redesigned.
11)
(a)
Source of Variation

Sum of D.F.
Squares

Mean Sum F
F Critical
of Squares Calculated ( = 0.05)
1
13172.02
1.419351 4.01954
2
49419.32
5.32518 3.16825
2
804.8167
0.086723 3.16825

Advertizing Media (M)

13172.02
Marketing Strategy (S)
98838.63
Interaction (MxS)
1609.633
Error
501137
54
9280.309
Total
614757
59
(b) Null Hypothesis that Interaction effects are not significant is accepted 5% level of
significance. Advertizing media and marketing strategy are independent at 5%
level of significance.
(c) The average weekly sales due to the three marketing strategies are significantly
different at 5% level of significance?
(d) The average weekly sales are not significantly different due to the two media
sources at 5% level of significance?
12) Correction: Use 5 observations per cell.
Source
of
5%
Variation
SS
DF
MS
VR
Critical F
Accept H0
Network
145
2
72.5 0.420968 3.27
Accept H0
News Time
160
2
80 0.464516 3.27
Accept H0
Interaction
240
4
60 0.348387 2.65
Error
6200
36
172.2222
Total
6745
44
13) (a)
ANOVA
Source of Variation

SS

df

MS

P-value

F crit

Between Groups
Within Groups

0.520833
31.86833

1
10

Total

32.38917

11

0.520833 0.163433
3.186833

0.694526

4.964603

(b) Two types of shock absorbers are not significantly different in mean strength at 5%
level of significance level.
(c)
t-Test: Two-Sample Assuming Equal Variances

Mean
Variance
Observations
Pooled Variance
Hypothesized
Mean Difference
df
t Stat
t Critical two-tail
(5%)

Manufacturer
10.71667
3.069667
6
3.186833

Competitor
10.3
3.304
6

0
10
0.404268
2.228139

Accept null hypothesis of no difference.

(d) F =0.163433, t =0.404268, t2=0.163433
14) (a)
Source

Sum of Squares

SALES_TECHNIQUE
STORE_SIZE

Mean Square

Sig.

23.333

7.778 6.512

.026

136.167

68.083 57.000

.000

7.167

166.667

11

Error
Corrected Total

df

Reject H0 at 5%

1.194

(b) Reject H0 of equality at 5%.

(c)
95% Confidence Interval
Difference
A&D

-2.6667

Accept H0 of No Difference.
15)

Std. Error
.89235

Sig.

Lower Bound
.118

-6.0377

Upper Bound
.7044

Source

Sum of Squares

INTERACTION

df

Mean Square

Sig.

At 5%

16.680

2.780

2.393

.093

NO DIFFERENCE

5.333

2.667

2.296

.143

NO DIFFERENCE

GASOLINE_ADD

85.280

28.427

24.471

.000

DIFFERENT

Error

13.940

12

1.162

Total

121.233

23

CAR

16)
a)
b) 3.1884

17)
a)
b) 67.39

18)
The regression equation is
Y=8.103 + 7.602 X1 + 3.111 X2
Predictor
Constant
X1
X2
S=3.335

Coef
8.103
7.602
3.111
R-sq = 92.3%

SE Coef
2.667
2.105
0.613
R-sq (adj) =

T
3.038245
3.611401
5.075041
91.02%

Analysis of Variance Table

SOURCE
DF
SS
MS
F
Regression
2
1612
806
71.9219
Residual Error
12
134.4789
11.2066
Total
14
1746.4789
(S is square root of MSE)
a) See table.
b) Critical Value F at (2, 12) d.f, 5% level of significance=3.8853, Reject H0. Model is valid.
Critical Value t at 12 d.f, 5% level of significance=2.17881, Both 1 and 2 are
significant.
c) See table.
d) See table.

19) The admissions officer for Clearwater College developed the following estimated regression
equation relating final college GPA to the students SAT mathematics score and high-school
GPA.
= - 1.41+ .0235x1 + .00486x2, where x1 = high-school grade point average, x2 = SAT
mathematics score, y = Final college grade point average. A portion of the Minitab
computer output follows:

The regression equation is

Y= -1.41 + .0235 X1 + .00486 X2
Predictor
Constant
X1
X2

Coef
-1.4053
0.023467
0.00486

SE Coef
0.4848
0.008666
0.001077

S=0.1298

R-sq = 93.73%

R-sq (adj) =

T
-2.89872
2.707939
4.512535
91.94%

Analysis of Variance Table

SOURCE
DF
SS
MS
F
Regression
2
1.76209
0.881045
52.30528
Residual Error
7
0.11791
0.016844
Total
9
1.88
0.208889
a) See table.
b) Critical Value F at (2, 7) d.f, 5% level of significance=4.7374, Reject H0. Model is
valid.
c) R-sq (adj) is good enough. H0 in F-test is rejected.
d) Critical Value t at 7 d.f, 5% level of significance=2.3646. H0:1 = 0 and H: 2 = 0 are
rejected in favor of two sided alternatives.

20) The personnel director for Electronics Associates developed the following estimated
regression equation relating an employees score on a njob satisfaction test to length of
service and wage rate.
= - 14.4- 8.69x1 + 13.5x2, where x1 = length of service (year), x2 = wage rate (dollars), y =
job satisfaction test score (higher scores indicate greater job satisfaction). A portion of the
Minitab computer output follows:
The regression equation is
Y= 14.4 8.69 X1 +13.52 X2
Predictor
Constant
X1
X2
S=3.733

Coef
14.448
-8.69
13.517
R-sq =90.12%

SE Coef
8.191
1.555
2.085
R-sq (adj)=

T
1.76
-5.58842
6.482974
86.16%

Analysis of Variance Table

SOURCE
DF
SS
MS
F
Regression
2
648.83
324.4150
22.7916
Residual Error
5
71.17
14.2340
Total
7
720.00
a) See table.
b) Critical Value F at (2, 5) d.f, 5% level of significance=5.7861, Reject H0. A significant
relationship is present.
c) Yes. Adj R-sqis good enough. Linear Relationship is present.
d) Critical Value t at 5 d.f, 5% level of significance=2.57058. H0:1 = 0 and H: 2 = 0 are
rejected in favor of two sided alternatives.

21)
a) Score = = 50.6095 + 1.5621 RecRes. The H0 of F test rejected at the .05 level of
significance. Linear model is valid.
b) R-Sq = 0.43, Adj R-Sq = 0.40. Model is not good enough.
c) Score = = 33.4848 + 1.8998 RecRes + 2.6108 Afford. The H0 of F test rejected at
the .05 level of significance. Linear model is valid. R-Sq = 0.81, Adj R-Sq = 0.78.
Model is improved and good enough.

22)
a) Speed = 97.570 + 0.069 Price + 0.000 Curb_Weight + 0.059 Horsepower 2.484
zero_to_60.
b) Using the F test, we determine that the linear model is valid.
c) At 10% level of significance, Curb_Weight is insignificant, all other regressors are
significant. At 5% level of significance, Curb_Weight and Price are insignificant
d) Speed = 95.384 + 0.073 Price + 0.057 Horsepower 2.474 zero_to_60.
Notice that the values of coefficients do not change much.

23)
a) CityMPG = 24.121 2.102 Displacement. All H0 under t test and F test are rejected
at 5% level of significance. Model is valid. R-Sq and Adj R-Sq are very small.
b) CityMPG = 26.383 2.439 Displacement -1.201 Drive4. All H0 under t test and F
test are rejected at 5% level of significance. Model is valid. R-Sq and Adj R-Sq are
improved a bit.
c) Dummy variable added in part (b) is significant at = .05.
d) CityMPG = 33.333 4.149 Displacement -1.237 Drive4 +2.161 EightCyl. R-Sq and
Adj R-Sq are improved.
e) All H0 under t test and F test are rejected at 5% level of significance. Model is valid.

24) Todays marketplace offers a wide choice to buyers of sport utility vehicles (SUVs) and pickup
trucks. An important factor too many buyers is the resale value of the vehicle. The following
table shows the resale value (%) after two years and the suggested retail price for 10 SUVs, 10
small pickup trucks, and 10 large pickup trucks (Kiplingers New Cars and Trucks 2000 Buyers
Guide).
a) Resale_Value = 0.002Suggested_Price. All H0 under t test and F test are rejected at
5% level of significance. Model is valid. R-Sq and Adj R-Sq are close to 1.
b) Yes. All H0 under t test and F test are rejected at 5% level of significance. Model is
valid. R-Sq and Adj R-Sq are close to 1.
c) Resale_Value = 0.002 Suggested_Price + 2.516 Type. [Type = 0, 1 and 2 for Sport
Utility, Small Pickup and Full-size Pickup respectively.]
d) Adj R-Sq is not improved. F test suggests that model is valid. Using t test, we find that
Type is not significant.

25) A 10-year study conducted by the American Heart Association collected data on how age,
blood pressure, and smoking relate to the risk of strokes. Risk is interpreted as the probability
(times 100) that the patient will have a stroke over the next 10-year period. A linear model is
fitted to predict the Risk of strokes (Risk) using age (Age) and blood pressure (BP). The output
of SPSS is as follows:

Model Summary
Model

R Square

.898a

Adjusted R
Square

.806

Std. Error of
the Estimate

0.783

6.90826

a. Predictors: (Constant), BP, Age

ANOVAb
Sum of
Squares

Model
1

Regression

Mean Square

3377.9060

1688.9529

813.0443

17

47.8261

4190.9500

19

220.5763

Residual
Total

df

F
35.3144

a. Predictors: (Constant), BP, Age

b. Dependent Variable: Risk
Coefficientsa
Unstandardized Coefficients
Model
1

B
(Constant)

Std. Error

-110.942

16.470

-6.7360

Age

1.315

.173

7.6012

BP

.296

.051

5.8039

a. Dependent Variable: Risk

(a) See Table.
(b) At 5% level of significance, Model is valid (Using F test) Critical Value of F at (2,17) d.f. and
5% level of significance is 3.5915.
(c) At 5% level of significance, and 17 d.f., t = 2.10982. All regressors are significant.
(d) Added variable is significant at 5% level of significance. Adj R-Sq is improved a bit. Model is
improved.

26)
a)
Model
I
II
III
b)

F Statistic
15.64103
20.58104
9.740506

Critical Value
4.964603
4.964603
4.256495

Reject H0
Reject H0
Reject H0

Test the significance of individual regression coefficients in all three models.

Model

Coefficients

T Statistic

Critical Value

0
1

II

0
2

III

0
1
2

3.399639
3.952562
0.587002
4.537125
0.77078
0.558036
1.455102

2.2281
2.2281

Significant
Significant

2.2281
2.2281

Insignificant
Significant

2.2622
2.2622
2.2622

Insignificant
Insignificant
Insignificant

c) Model II is the best. It has highest Adjusted R-Sq. It could be improved by removing
intercept.
d) Normality is required for the validity of F and t tests.

27) Predicted Y = 3.239 X2 (No intercept model will be better as intercept comes to be
insignificant.) Inclusion of both regressors creates multicollinearity. Regressor X2 is included
as it has higher correlation with Y.

28) Predicted Y = 1.708 X1 +0.016 X2

Adj R-Sq is close to 1. MSE is small. F-test suggests model is valid. t test suggests both
regressors are significant. No eigen value is close to zero. Only VIFs are more than 5. If we use
stepwise method for variable elimination, it eliminates X2. But Adj R-Sq is also reduced a bit.
MSE is also increased. This means that the multicollinearity is not a serious problem here. And
a no intercept model taking both regressors is a better model.

29) When we fit a linear regression model taking only X1 as regressor

Intercept model has very small R-Sq and Adj R-Sq. In F test and t-test, we conclude
that X1 is not significant.
No-intercept model looks much better. R-Sq and Adj R-Sq are much higher. MSE is
reduced. In F-test and t-test, we conclude that X1 is significant. So this model is much better.
When we take X1 and X2 both in the model, R-Sq and Adj R-Sq are increased. MSE is reduced.
In F-test and t-test, we conclude that X1 and X2 are significant.
So a no-intercept model taking X1 and X2 both is the best.
Predicted Y = 0.019 X1 +17.456 X2

Adj R-Sq=0.903