1. You know the true properties of the data so you can answer the two following questions: (and you do not need to know the Y values to answer)

Expected value= 0 Variance= 10

a. What is the true variance of beta hat 1?

b. What is the true variance of beta hat 2?

Consumer Research, Inc., is an independent agency that conducts research on consumer attitudes and behaviors for a variety of firms. In one study, a client asked for an investigation of consumer characteristics that can be used to predict the amount charged by credit card users. Data were collected on annual income, household size, and annual credit card charges for a sample of 50 consumers and is shown below:

1. Develop two simple regression equations
   1. Use annual income as the independent variable and annual credit card charges as the dependent variable
   2. Use household size as the independent variable and annual credit card charges as the dependent variable

1. • Which variable is the better predictor of annual credit card charges?
   • Discuss your findings.
2. Develop an estimated regression equation for annual credit card charges with annual income and household size as the independent variables.
   • Discuss your findings.
   • What is the predicted annual credit card charge for a three-person household withan annual income of $40,000?
3. Would the inclusion of additional independent variables improve the model? Why? If so, what additional variables would you include?

***PLEASE SHOW HOW TO SOLVE IN EXCEL***

Case Problem 3:        Consumer Research, Inc.

(Copy the worksheet named “Consumer” in QMB3200-Homework#10Data.xlsx into your file for this problem)

Consumer Research, Inc., is an independent agency that conducts research on consumer attitudes and behaviors for a variety of firms. In one study, a client asked for an investigation of consumer characteristics that can be used to predict the amount charged by credit card users. Data were collected on annual income, household size, and annual credit card charges for a sample of 50 consumers and are provided in the worksheet named “Consumer.”

Managerial Report

1. Use methods of descriptive statistics to summarize the data. Comment on the findings.
2. Develop estimated regression equations, first using annual income as the independent variable and then using household size as the independent variable. Which variable is the better predictor of annual credit card charges? Discuss your findings.
3. Develop an estimated regression equation with annual income and household size as the independent variables. Discuss your findings.
4. What is the predicted annual credit card charge for a three-person household with an annual income of $40,000?
5. Discuss the need for other independent variables that could be added to the model. What additional variables might be helpful?

Calculate the elasticity for the following questions (USING THE MIDPOINT (AVERAGE) FORMULA) and indicate if the goods are:

1. Inferior,
2. Normal,
3. Complements, or
4. Substitutes

(Please Include The Negative signs in your answers where appropriate and calculate to 2 decimals)

A. The price of gasoline increases from 10 per barrel to 32 per barrel and as a result, the demand per month for new cars changes from 700 to 200.

Part 1: The elasticity is:


Part 2: These goods are: (answer using numbers, 1-4)

B. As a result of a change in income from 1,900 to 3,100 per month, the consumption of good X changes from 300 to 375 units.


Part 3: The elasticity is:



Part 4: Good X is a(an): (answer using numbers, 1-4)


C. As a result of a decrease in the price of good Y from 45 to 17 the demand for good X changes from 200 to 400 units.


Part 5: The elasticity is:



Part 6: These goods are: (answer using numbers, 1-4)


D. As a result of an economic boom in Calgary, the average income increases from 2,200 to 7,800 per month and as a result the demand for new houses increases from 200 to 260 units.


Part 7: The elasticity is:



Part 8: New houses are a(an): (answer using numbers, 1-4)

In this assignment, you will price an option for Facebook (TICKER:FB) and use the Excel upload file provided for your calculations. You have daily prices for FB between 4/7/2014 and 4/2/2015.

1. Calculate daily returns, volatility and annualized volatility.

2. Calculate the price of Call option on FB that expires on 4/17/2015. Strike price for the option is 77$. Assume you’re calculating price on 4/6/2015 and FB trades at $81.56 on that date.

3. After you calculated the price based on your assumptions you realized that the option trades at 4.81$. Calculate the implied volatility using goal seek. Daily Prices

Table 1

The following table shows output per hour produced by the different units of labor.

Table 1

The marginal revenue product of a resource is equal to the product of the marginal product of an input and marginal revenue.

     8.   According to Table 1, if the wage rate is $9 per hour, how many workers should this firm hire?

     9. According to Table 1, the marginal-revenue product of the:

   10.   According to Table 1, if the wage rate is $6 per hour, how many workers should this firm hire?

   11.   Refer to Table 1. If both the wage rate and the price of the good falls to $2, how many workers would the firm hire?

12.­ The structure of the product market as described by Table 1 is:

A study was designed to compare the attitudes of two groups of nursing students towards computers. Group 1 had previously taken a statistical methods course that involved significant computer interaction. Group 2 had taken a statistic methods course that did not use computers. The students' attitudes were measured by administering the Computer Anxiety Rating Scale (CARS). A random sample of 11 nursing students from Group 1 resulted in a mean score of 56.1 with a standard deviation of 5.5 A random sample of 16 nursing students from Group 2 resulted in a mean score of 67.7 with a standard deviation of 7.3 Can you conclude that the mean score for Group 1 is significantly lower than the mean score for Group 2? Let μ1μ1 represent the mean score for Group 1 and μ2 represent the mean score for Group 2. Use a significance level of α=0.05 for the test. Assume that the population variances are equal and that the two populations are normally distributed.

Step 1 of 4: State the null and alternative hypotheses for the test.

Step 2 of 4: Compute the value of the t test statistic. Round your answer to three decimal places.

Step 3 of 4: Determine the decision rule for rejecting the null hypothesis H0. Round your answer to three decimal places.

Step 4 of 4: State the test's conclusion.

A study was designed to compare the attitudes of two groups of nursing students towards computers. Group 1 had previously taken a statistical methods course that involved significant computer interaction. Group 2 had taken a statistic methods course that did not use computers. The students' attitudes were measured by administering the Computer Anxiety Rating Scale (CARS). A random sample of 10 nursing students from Group 1 resulted in a mean score of 65.8 with a standard deviation of 5.1. A random sample of 16 nursing students from Group 2 resulted in a mean score of 70.4 with a standard deviation of 7.6. Can you conclude that the mean score for Group 1 is significantly lower than the mean score for Group 2? Let μ1 represent the mean score for Group 1 and μ2 represent the mean score for Group 2. Use a significance level of α=0.05 for the test. Assume that the population variances are equal and that the two populations are normally distributed.

Step 1 of 4: State the null and alternative hypotheses for the test.

Step 2 of 4: Compute the value of the t test statistic. Round your answer to three decimal places.

Step 3 of 4: Determine the decision rule for rejecting the null hypothesis H0. Round your answer to three decimal places.

Step 4 of 4: State the test's conclusion.