Beachcomber Ltd in a local car dealership that sells used and new vehicles. The manager of the company wants to know how different variables affect the sales of his vehicles. A random sample of yearly data was taken with the view to testing the model: SALES=?+?AGE+?MIL+?ENG Where SALES= amount that a vehicle is sold for($000’s), AGE = age of the vehicle, MIL= the total mileage of the vehicle at the point of sale and ENG = the size of the engine. The sample of data was processed using MINITAB and the following is an extract of the output obtained: The regression equation is ***** Coef StDev t-ratio p-value Predict or constant 1.7586 0.2525 6.9648 0.0000 AGE 0.2124 0.3175 * 0.5042 MIL -0.7527 0.3586 -2.0991 ** ENG 4.8124 *** 7.7664 0.0000 Analysis of Variance Source DF SS MS F P Regressi 3 413.1291 138.709 **** 0.00 on 7 Error 50 457.7607 2.2888 Total 53 a) Hence test whether δ is significant. Give reasons for your answer. b) Perform the F Test making sure to state the null and alternative hypothesis. c) Given an interpretation of the term “R-sq” and comment on its value.
Question 4
Beachcomber Ltd in a local car dealership that sells used and new vehicles. The manager of the company wants to know how different variables affect the sales of his vehicles. A random sample of
yearly data was taken with the view to testing the model:
SALES=?+?AGE+?MIL+?ENG
Where SALES= amount that a vehicle is sold for($000’s), AGE = age of the vehicle, MIL= the total
mileage of the vehicle at the point of sale and ENG = the size of the engine. The sample of data was processed using MINITAB and the following is an extract of the output obtained:
The regression equation is *****
Coef StDev t-ratio p-value
Predict
or
constant 1.7586 0.2525 6.9648 0.0000
AGE 0.2124 0.3175 * 0.5042
MIL -0.7527 0.3586 -2.0991 **
ENG 4.8124 *** 7.7664 0.0000
Analysis of Variance
Source DF SS MS F P
Regressi 3 413.1291 138.709 **** 0.00
on 7
Error 50 457.7607 2.2888
Total 53
a) Hence test whether δ is significant. Give reasons for your answer.
b) Perform the F Test making sure to state the null and alternative hypothesis.
c) Given an interpretation of the term “R-sq” and comment on its value.
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