In: Statistics and Probability
Let’s continue to use the Toluca.txt dataset. We now assume a normal error model: Yi = β0 + β1xi + i (i = 1, . . . , n), i ∼ N (0, σ2 ), where xi = lotSize and Yi = workHrs. a. Obtain an estimate for σ 2 . Let’s call this estimator ˆσ 2 . You can either calculate this using the formula directly or obtain this from the R output using lm. b. Construct a 90% confidence interval for β0. Remember to use the t-distribution here. Interpret your confidence interval for β0. c. Test H0 : β1 = 0 vs. H1 : β1 > 0 at 0.05 significance level. State the test statistic, its null distribution, the decision rule, and your conclusion.
lotSize workHrs
80 399
30 121
50 221
90 376
70 361
60 224
120 546
80 352
100 353
50 157
40 160
70 252
90 389
20 113
110 435
100 420
30 212
50 268
90 377
110 421
30 273
90 468
40 244
80 342
70 323
R output:
Call:
lm(formula = workHrs ~ lotSize)
Residuals:
Min 1Q Median 3Q Max
-83.876 -34.088 -5.982 38.826 103.528
Coefficients:
Estimate Std. Error t value Pr(>|t|)
(Intercept) 62.366 26.177 2.382 0.0259 *
lotSize 3.570 0.347 10.290 4.45e-10 ***
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Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1
Residual standard error: 48.82 on 23 degrees of freedom
Multiple R-squared: 0.8215, Adjusted R-squared: 0.8138
F-statistic: 105.9 on 1 and 23 DF, p-value: 4.449e-10
Analysis of Variance Table
Response: workHrs
Df Sum Sq Mean Sq F value Pr(>F)
lotSize 1 252378 252378 105.88 4.449e-10 ***
Residuals 23 54825 2384
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Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’
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