Assume you are involved in a study sponsored to determine whether residential el

Question

Assume you are involved in a study sponsored to determine whether residential electricity prices (REP) differ by region across the United States. REP is calculated based on cents per kilowatt hour charged by each utility for their residential customers. We would like to examine whether the residential electricity prices (REP) differ by region – Pacific Coast, Upper Midwest, Southwest, Northeast and Southeast. What test we would do?

2. If some other factor, such as availability of alternate energy (which can be viewed as a continuous-level variable) helps explain differences in REP, how would you take that into account in your analysis?

3. Further, If We examined whether REP changes over time for utilities it is tracking, will this increase or decrease explained variation?why?

Explanation / Answer

1)We can do a hypothesis testing based on the data we have got with

H0:Residential Prices donot differ by region

Ha:Residential prices differ by region

you can surely do a t test to find the level of significance the data lies within and then reject or accept the alternate hypothesis.

2)As this is a cont variable,One can estimate the degree of variation and dependence using a regression model and finding its R^2 or the P value for the variable.Accept or reject the variable based on the value of P > or < level of significance

3)If REP changes over time.There will surely be a variation in the level of significance.If there is not much change in the REP,the significance maynot change.But if there is a huge variation,The level of significance obviously changes.

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