E- answer and explain F- calculate and explain G- explain H- explain and answer
ID: 3234776 • Letter: E
Question
E- answer and explain F- calculate and explain G- explain H- explain and answer I- explain J- explain Heller Company manufactures and sells lawn mowers. The managers have estimated a linear equation that quantity the price the mower. The data and EXCEL printout and scatter plot are appended. Use that information to answer the following questions. a. Write down the estimated OLS prediction equation 121.833 b. Explain the relevance of the R-sq statistic. What is it measuring and what is the importance of the estimated value on the computer printout? c. According to the least squares estimate, a one-unit decrease in price is associated with what change in quantity of sales? d. At the determine whether there is a negative linear relationship between price of the significance, analysis. machine Show all relevant He; B20 value ul, alapt Ha salesExplanation / Answer
e. If part c is wrong, then we have probably chosen a wrong model. We have assumed a linear model and if the true relationship is not linear then we wil not have change in sales per unit decrease in price as given by a linear equation.
This is error due to wrong choice of model and can be reduced by choosing a better model that depicts non-linear relation too
f. r = Multiple R = 0.7262 (as given)
g. The 95%Ci for Beta1 as given is (-0.466, -0.0612)
h. The least square estimate of the intercept means that at when price is 0, what is the estimated number of quantities sold.
i. We can see that the R^2 value is low but the regression coefficients are significant when only price is considered. Hence, there may be other factors other than price.
j. Other factors could be competitiveness in the market, demand fluctuations and so on.
k. The scatter plot shows a widening relationship between price and quantity and hence it may be said that with increase in price, quantity sold would decrease but the relationship is not at best linear. We could check for inverse relationship or non-linearity.
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