In an economics class, a student was asked to determine the per person consumpti
ID: 3320457 • Letter: I
Question
In an economics class, a student was asked to determine the per person consumption of chicken in pounds (CONS) and how it is affected by per capita income in hundreds of dollars (INC), price per pound of chicken in cents (PC), and the price per pound of beef in cents (PB). She gathered the data on these variables for the years from1951 through 1994. After running the regression in Excel and testing for curvature and interaction, she obtained the final output below. Use an alpha of .05 and this output to answer the questions.
Regression Statistics
Multiple R
0.993
R Square
0.987
Adjusted R Square
0.986
Standard Error
2.004
Observations
44
ANOVA
df
SS
MS
F
Sig F
Regression
3
12031
4010.490
998.9207
0.0000
Residual
40
161
4.015
Total
43
12192
Coefficients
Standard Error
t Stat
P-value
Intercept
31.50
1.313
23.995
0.0000
PC
-0.73
0.080
-9.119
0.0000
PB
0.11
0.046
2.499
0.0167
INC
0.23
0.016
14.217
0.0000
1. If the price of beef rises by 10 cents, the consumption of chicken will
a. Rise by 24.99 pounds
b. Rise by 1.10 pounds
c. Be unaffected
d. Fall by 1.10 pounds
2. If people’s incomes rise by $1000, how will chicken consumption change?
a. People will consume 2.3 pounds less chicken
b. People will consume 2.3 pounds more chicken
c. People will consume more chicken and more beef
d. People will consume less chicken and more beef
Question 26
3. Which (if any) of the X variables are quadratic?
a. None
b. INC
c. PC
d. PB
4. Which of the following would have the greatest effect on chicken consumption?
a. A $1000 increase in people’s incomes
b. A $1000 decrease in people’s incomes
c. A 10 cent rise in the price of beef
d. A 10 cent rise in the price of chicken
5. What is the estimated chicken consumption for a year with INC = 100, PC = 15, and PB = 40?
a. 61.1
b. 47.9
c. 69.9
d. 23.9
6. If you ran the correlation coefficient between PC and PB finding that it was 0.2, what action should you take?
a. Eliminate PB
b. Eliminate both
c. Do nothing. Use the equation as it is.
d. Eliminate PC
Regression Statistics
Multiple R
0.993
R Square
0.987
Adjusted R Square
0.986
Standard Error
2.004
Observations
44
ANOVA
df
SS
MS
F
Sig F
Regression
3
12031
4010.490
998.9207
0.0000
Residual
40
161
4.015
Total
43
12192
Coefficients
Standard Error
t Stat
P-value
Intercept
31.50
1.313
23.995
0.0000
PC
-0.73
0.080
-9.119
0.0000
PB
0.11
0.046
2.499
0.0167
INC
0.23
0.016
14.217
0.0000
Explanation / Answer
from above output:
1)1. If the price of beef rises by 10 cents, the consumption of chicken will
b. Rise by 1.10 pounds
2) If people’s incomes rise by $1000, how will chicken consumption change
b. People will consume 2.3 pounds more chicken
3)a. None
4) d. A 10 cent rise in the price of chicken
5) estimated chicken consumption for a year with INC = 100, PC = 15, and PB = 40
=31.50+15*(-0.73)+0.11*40+100*0.23 =47.9
6)c. Do nothing. Use the equation as it is.
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