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!!!