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Final Exam Review Econ 207 Dr. Khan Note: Review the lecture notes, homework problems, and quizzes. 1. Solve problems 3 to 10 from review worksheet I. 2. Solve all the problems from review worksheet II. 3. The director of graduate studies at a large college of business would like to be able to predict the grade point index (GPI) of students in an MBA program based on Graduate Management Aptitude Test (GMAT) score. A sample of 7 students who had completed 2 years in the program is selected. The results are as follows: Observation 1 2 3 4 5 6 7 GMAT Score 688 647 652 608 680 617 557 GPI 3.72 3.44 3.21 3.29 3.91 3.28 3.02 a. Compute the regression line and interpret. b. Predict the GPI for a student with a GMAT score of 600. c. What is the Coefficient of determination? What is the interpretation? d. Compute the standard error of the estimate and interpret. e. Compute the correlation coefficient and interpret. f. Test the significance of the estimated slope parameter at the 1% level. h. Test the claim that the slope parameter is equal to 1. 2. A marketing manager with Nexclor Industries, Inc. engaged the services of a consultant to develop a multiple regression model to predict sales from advertising expenditure and market share. Data were collected for ten periods and are presented in the accompanying table. Sales are measured in thousand of dollars, as are advertising expenditures, and market shares are given as percentage. Advertising Expenditure 4.3 4.0 4.1 4.6 5.5 4.5 4.3 Sales 10.8 12.6 8.3 9.2 11.1 10.9 7.9 Market Share 26.2 32.2 17.3 16.7 18.9 13.2 14.4 2.8 2.6 3.1 11.6 8.2 9.0 27.1 20.8 22.0 Computer Output ANOVA Source DF SS MS F Signif. F ________________________________________________________________________ Regression 2 14.858 7.429 -.035 Residual -------------Total 9 24.144 ________________________________________________________________________ ________________________________________________________________________ Predictor Coef SE t-ratio Sig Constant 1.709 2.737 .62 .553 AE .912 .461 ---.088 Market Share .221 .0682 ---.014 a. b. c. d. e. f. g. h. State the regression equation. Interpret the coefficients of the model. What is the coefficient of determination? Explain its meaning. What is the predicted value of sales given that advertising is 5 and market share is 25? Test the hypothesis that market share is positively related to sales. Test the claim that each of the slope coefficients is equal to unity. Test the overall significance of the model. Can we make a statement that advertising expenditure does not have any impact on sales? ** Review all the homework problems, problems in the lecture note and quizzes. Then solve this worksheet. Good Luck!!!