Waterbury Insurance Company wants to study the relationship between the amount of fire damage and the distance between the burning house and the nearest fire station. This information will be used in setting rates for insurance coverage. For a sample of 30 claims for the last year, the director of the actuarial department determined the distance from the fire station (x) and the amount of fire damage, in thousands of dollars (y). The MegaStat output is reported below.

Write out the regression equation. (Round your answers to 3 decimal places.)

How much damage would you estimate for a fire 4 miles from the nearest fire station? (Round your answer to the nearest dollar amount.)

Determine and interpret the coefficient of determination. (Round your answer to 3 decimal places.)

Fill in the blank below. (Round your answer to one decimal place.)

_______________ % of the variation in damage is explained by variation in distance.

Determine the correlation coefficient. (Round your answer to 3 decimal places.)

State the decision rule for 0.01 significance level: H₀ : ρ = 0; H₁ : ρ ≠ 0. (Negative value should be indicated by a minus sign. Round your answers to 3 decimal places.)

Compute the value of the test statistic. (Round your answer to 2 decimal places.)

A consumer testing agency tested 130 makes and models of cars. In the model below, price (in 1000s) was the dependent variable, and the independent variables included miles per gallon (MPG), Handling score (on a scale from 0 to 5) and Reliability score (on a scale from 0 to 20), as well as a dummy, d_Leather, indicating that the car has a leather interior. The residual plot for MPG is also included.

a. Write the model estimated in the above equation.

b. Is the regression significant overall?

c. What is the interpretation of the coefficient for d_Leather?

d. What is the interpretation of the coefficient for Reliability?

e. Looking at the residual plot, does it look like our assumptions on the error term are sound? What would you recommend to improve the model?

f. Write the new model based on your recommendation from part c.

A consumer testing agency tested 130 makes and models of cars. In the model below, price (in 1000s) was the dependent variable, and the independent variables included miles per gallon (MPG), Handling score (on a scale from 0 to 5) and Reliability score (on a scale from 0 to 20), as well as a dummy, d_Leather, indicating that the car has a leather interior. The residual plot for MPG is also included.

a. Write the model estimated in the above equation.

b. Is the regression significant overall?

c. What is the interpretation of the coefficient for d_Leather?

d. What is the interpretation of the coefficient for Reliability?

e. Looking at the residual plot, does it look like our assumptions on the error term are sound? What would you recommend to improve the model?

f. Write the new model based on your recommendation from part c.

The accompanying table shows a portion of a data set that refers to the property taxes owed by a homeowner (in $) and the size of the home (in square feet) in an affluent suburb 30 miles outside New York City.

a. Estimate the sample regression equation that enables us to predict property taxes on the basis of the size of the home. (Round your answers to 2 decimal places.)

TaxesˆTaxes^ =  +  Size.

b. Interpret the slope coefficient.

• As Size increases by 1 square foot, the property taxes are predicted to increase by $6.67.

• As Property Taxes increase by 1 dollar, the size of the house increases by 6.67 ft.

c. Predict the property taxes for a 1,600-square-foot home. (Round coefficient estimates to at least 4 decimal places and final answer to 2 decimal places.)

  TaxesˆTaxes^               

Wiemers Products Company operates three divisions, each with its own manufacturing plant and marketing/sales force. The corporate headquarters and central accounting office are in Wiemers, and the plants are in Freeport, Rockport, and Bayport, all within 50 miles of Wiemers. Corporate management treats each division as an independent profit center and encourages competition among them. They each have similar but different product lines. As a competitive incentive, bonuses are awarded each year to the employees of the fastest-growing and most-profitable division.

Indy Grover is the manager of Wiemers's centralized computerized accounting operation that enters the sales transactions and maintains the accounts receivable for all three divisions. Indy came up in the accounting ranks from the Bayport division where his wife, several relatives, and many friends still work.

As sales documents are entered into the computer, the originating division is identified by code. Most sales documents (95%) are coded, but some (5%) are not coded or are coded incorrectly. As the manager, Indy has instructed the data-entry personnel to assign the Bayport code to all uncoded and incorrectly coded sales documents. This is done, he says, “in order to expedite processing and to keep the computer files current since they are updated daily.” All receivables and cash collections for all three divisions are handled by Wiemers as one subsidiary accounts receivable ledger.

(a)  

Who are the stakeholders in this situation?

(b)  

What are the ethical issues in this case?

(c)  

How might the system be improved to prevent this situation?

1. A Nash equilibrium occurs a. when a unilateral move by a participant does not make the participant better off. b. when a unilateral move by a participant makes the participant better off. c. when a unilateral move by a participant does not make the other participant better off. d. when a unilateral move by a participant makes the other participant worse off. 2. Several politicians have proposed a "guzzler" tax that would be added to the cost of few-miles-per-gallon vehicles. If enacted, this tax would most likely a. reduce the equilibrium price. b. increase the equilibrium output. c. increase U.S. dependency on foreign oil supplies. d. shift the supply curve (for automobiles) inward. e. do all of these.

3. A cartel is a. implicit collusion. b. explicit collusion. c. a facilitating practice. d. a merger of firms into a monopoly. e. legal in the United States.

4. In some African countries, the elephant population increased significantly when the government facilitated a. substitution of African elephants for Indian elephants. b. a shift from common ownership to private property rights. c. social regulation of elephant breeding. d. a shift from private ownership to public ownership. e. the creation of a natural monopoly. 5. Which of the following is not one of the classifications of current economic thinking? a. Keynesian economists b. Reaganomists c. Marxists d. free market economists e. All of these were presented as current schools of thought.

A 40-mile stretch of rural road with limited access is used primarily by regional commuters and business travelers to move between two major interstate highways. The legal speed limit on the road is currently 55 miles per hour (mph) and the estimated average speed is 61 mph. Traffic engineers predict that if the speed limit were raised to 65 mph and enforcement levels were kept constant, the average speed would rise to 70 mph.

Currently, an average of 5,880 vehicles per day use the stretch of road -- approximately half are commuters and half are business travelers. Traffic engineers do not expect that a higher speed limit will attract more vehicles. Vehicles using the road carry, on average, 1.6 people. Traffic engineers predict that raising the speed limit on this stretch of road would result in an additional 52 vehicle crashes involving, on average, 0.1 fatalities annually. They also predict that operating costs would rise by an average of $0.002 per mile per vehicle.

The average hourly wage in the county in which the majority of users of the road work is $18.30/hour.

What would be the general categories of benefits and costs associate with raising the speed limit?

Estimate the annual net benefits of raising the speed limit on the road from 55 mph to 65 mph. In doing this, test the sensitivity of your estimate of annual net benefits to several alternative estimates of the value of time savings and the value of life that you have selected from the chapter.

To illustrate the effects of driving under the influence​ (DUI) of​ alcohol, a police officer brought a DUI simulator to a local high school. Student reaction time in an emergency was measured with unimpaired vision and also while wearing a pair of special goggles to simulate the effects of alcohol on vision. For a random sample of nine​ teenagers, the time​ (in seconds) required to bring the vehicle to a stop from a speed of 60 miles per hour was recorded. Complete parts​ (a) and​ (b). ​Note: A normal probability plot and boxplot of the data indicate that the differences are approximately normally distributed with no outliers. LOADING... Click the icon to view the data table. ​(a) Whether the student had unimpaired vision or wore goggles first was randomly selected. Why is this a good idea in designing the​ experiment? A. This is a good idea in designing the experiment because reaction times are different. B. This is a good idea in designing the experiment because the sample size is not large enough. C. This is a good idea in designing the experiment because it controls for any​ "learning" that may occur in using the simulator. Your answer is correct. ​(b) Use a​ 95% confidence interval to test if there is a difference in braking time with impaired vision and normal vision where the differences are computed as​ "impaired minus​ normal." The​ 95% confidence interval is ​( nothing​, nothing​). ​(Round to the nearest thousandth as​ needed.)

​Normal, Upper X Subscript i
4.49
4.34
4.58
4.56
4.31
4.83
4.55
5.00
4.79
​Impaired, Upper Y Subscript i
5.86
5.85
5.51
5.29
5.90
5.49
5.23
5.63
5.63

Part 1: Discuss the purpose and implications (higher vs. lower premiums) of each of the 8 major rating factors for determining private passenger auto insurance premiums.

Part 2: Select ONE of the following scenarios. Discuss at least 4 of the 8 factors and how they would impact that type of risk. Explain your answer and offer suggestions for how a policyholder in a similar situation might be able to lower their premiums.

1. 16-year old single male driver living with his parents in Chicago, Illinois, who maintains a 2.5 GPA at his high school. He just obtained his driver’s license after successfully completing driver’s education classes and is driving a 2002 Ford Taurus sedan to and from a private school in the suburbs.

2. 45-year old married female living in Wichita, Kansas, with an insurance score of 559. She and her spouse own a new Chevrolet Suburban full-size SUV, a Toyota Tundra pickup truck for hauling feed for their horses, and a 1965 Chevrolet Corvette. She has had no accidents or citations in the past 5 years.

3. 85-year old widowed male living in Kalona, Iowa, with an insurance score of 750. He drives a 2013 Honda Civic under 10,000 miles per year. In the past 3 years, he has been ticketed twice for speeding and had one fender-bender in the grocery store parking lot.