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Explain what is meant by an error term. What assumptions do we make
about an error term when estimating an ordinary least squares regression?
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- Explain Distribution of Regression Statistics with Normal Errors?What is a linear regression model? What is measured by the coefficients ofa linear regression model? What is the ordinary least squares estimator?Sally Sells Sea Shells by the Sea Shore and collects all sales dataNow she is curious to find out what the elasticity of demand is for her shells Assume they are all the same type and quantity She scatter plots the data and finds there is a linear relationship that looks ripe for a regression estimation of the price response function for her shells The slope of her regression line is 61. Currently, her average daily price is 11.74 and she sells 95 quantity at that priceCalculate the point elasticity of demand for her sea shells
- If we run a regression where y (bankruptcy) = f (factors potentially predicting bankruptcy), what is the dependent variable?Describe the important characteristics of the variance of a conditional distribution of an error term in a linear regression. What are the implicationsfor OLS estimation?When running a ols regression, if my control variables are insignificant via T-test should I keep them in the regression? Are they significant?
- As an auto insurance risk analyst, it is your job to research risk profiles for various types of drivers. One common area of concern for auto insurance companies is the risk involved when offering policies to younger, less experienced drivers. The U.S. Department of Transportation recently conducted a study in which it analyzed the relationship between 1) the number of fatal accidents per 1000 licenses, and 2) the percentage of licensed drivers under the age of 21 in a sample of 42 cities. Your first step in the analysis is to construct a scatterplot of the data. FIGURE. SCATTERPLOT FOR U.S. DEPARTMENT OF TRANSPORATION PROBLEM U.S. Department of Transportation The Relationship Between Fatal Accident Frequency and Driver Age 4.5 3.5 3 2.5 1.5 1 0.5 6. 10 12 14 16 18 Percentage of drivers under age 21 Upon visual inspection, you determine that the variables do have a linear relationship. After a linear pattern has been established visually, you now proceed with performing linear…1. An analyst ran a regression with four predictor variables. Variable description Variable Name Salary in R1000.00 Years at company Age in years Education in years SALARY YEARS AGE EDYEARS He suspects that AGE can be dropped from the model and he decided to employ forward stepwise regression. Show all the steps he has to do to get to a fitted response regression without age. 2. BIC, Bayesian information criteria or SBC, Schwarz' Bayesian Criteria, are the same. Give the aquations for AIC and BIC and explain the difference in these two equations in terms of the terms in the equations as well as the consequences. 3. Give a short description of measuring the actual predictive capabilities of the selected regression. model.How should I interpret the coefficients on a regression with a naural log of a dependent variable? Ex: Ln(wage)=B1+B2Experience+B3Male...+Ui
- Numerical Answer Only Type Question Enter the numerical value only for the correct answer in the blank box. If a decimal point appears, round it to two decimal places. Assume that the number of visits by a particular customer to a mall located in downtown Toronto is related to the distance from the customer's home. The following regression analysis shows the relationship between the number of times a customer visits(Y)per month and the distance(X, measured in km) from the customer's home to the mall. \[ Y=15-0.5 X \] A customer who lives30 kmaway from the mall will visi______ who lives10 km away. less times than a customerStores commonly offer a cheaper unit price for large quantity purchases. Quantity 1 2 5 10 20 Unit Price $100.00 $80.00 $70.00 $50.00 $40.00 a. Use regression to find a logarithmic equation to model the data. Round the numbers in your equation to 2 decimal places. y = a + bln(z) with You b b. Use your equation to find an appropriate unit price for a customer who purchases 15 items. c. Use your equation to find an appropriate unit price for a customer who purchases 25 items. $An OLS regression should be used when the independent variable is nominal. A. True B. False