A computer software developer would like to use the number of downloads (in thou

Question

A computer software developer would like to use the number of downloads (in thousands) for the trial version of his new shareware to predict the amount of revenue (in thousands of dollars) he can make on the full version of the new shareware. Following is the output from a simple linear regression along with the residual plot and normal probability plot obtained from a data set of 30 different sharewares that he has developed:

Q1) which of the following assumptions appears to have been violated?

I. Normality of error         II. Homoscedasticity        III. Independence of errors

A) I only

B) III only

C) None of these

D) II only

Q2) If the Durbin-Watson statistic has a value close to 0, which assumption is violated?

I. Normality of the errors             II. Independence of errors           III. Homoscedasticity

A) I only

B) None of these

C) II only

D) III only

Q3) which of the following is the correct null hypothesis for testing whether there is a linear relationship between revenue and the number of downloads?

A) H0:B1 = 0

B) H0: b1= 0

C) H0: b1 = 0

D) H0: B1= 0

Regression Statistics Multiple R 0.8691 0.7554 R Square Adusted R Square 0.7467 44.4765 Standard Error 30.0000 Observations ANOVA Significance F 171062.9193 1710629193 Regression 86.4759 0.0000 Residual 28 55388.4309 1978.1582 Total 29 226451.3503 Coefficients Standard Emor tStat P-value Lower 952 Upper 95% Intercept 95.0614 26.9183 3.5315 0.0015 150.2009 -39.9218 Download 3,7297 0.4011 9.2992 4.5513 0.0000 2.9082 Download Residual Plot 220 100 20 20 60 -100 0.00 20.00 40,00 60.00 80,00 100.00 120,00 Download

Explanation / Answer

Q1) all of above assumptions are required for regression.

Ans is option c - none of these is violated

Q2) Durbin Watson statistics independent of error is violated

Q3) Ho: B1 = 0

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