Show your work/thought process:a) Manually calculate the Sum of Squared Errors for this model.b) The coefficient on the “With Seagal” variable is 3.35. Explain what this means in simple language.c) Assume that Seagal will star in “The Expendables, Part 4”, and that pre-release audiences give the movie a Rotten Tomatoes rating of 52. Predict how much money the movie will earn. Actor Steven Seagal has demanded an exorbitant salary to star in the movie, "The Expendables, Part 4".One analyst thinks that the overall Rotten Tomatoes score of a movie determines its ultimate earnings.Another analyst thinks that Seagal's presence alone will boost earnings, regardless of the quality of themovie. To test both of these theories, the following data is collected for six action movies:Earnings (millions)551072661422SUMMARY OUTPUTRotten Tomatoes Rating801592712041A multiple regression is performed and these are the results:Regression StatisticsMultiple RR SquareAdjusted R SquareStandard ErrorObservationsInterceptRotten Tomatoes RatingWith Seagal (1 = yes, 0 = no)0.670.850.7019.0710.00With Seagal (1 = yes, 0 = no)001101Coefficients4.230.803.35Standard Error7.410.148.32

Dependent variable (Y) = Earnings (in millions) Independent variables are Rotten Tomatoes Rating and…

Answered: Show your work/thought process: a)…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Show your work/thought process:

a) Manually calculate the Sum of Squared Errors for this model.

b) The coefficient on the “With Seagal” variable is 3.35. Explain what this means in simple language.

c) Assume that Seagal will star in “The Expendables, Part 4”, and that pre-release audiences give the movie a Rotten Tomatoes rating of 52. Predict how much money the movie will earn.

Actor Steven Seagal has demanded an exorbitant salary to star in the movie, "The Expendables, Part 4".
One analyst thinks that the overall Rotten Tomatoes score of a movie determines its ultimate earnings.
Another analyst thinks that Seagal's presence alone will boost earnings, regardless of the quality of the
movie. To test both of these theories, the following data is collected for six action movies:
Earnings (millions)
55
10
72
66
14
22
SUMMARY OUTPUT
Rotten Tomatoes Rating
80
15
92
71
20
41
A multiple regression is performed and these are the results:
Regression Statistics
Multiple R
R Square
Adjusted R Square
Standard Error
Observations
Intercept
Rotten Tomatoes Rating
With Seagal (1 = yes, 0 = no)
0.67
0.85
0.70
19.07
10.00
With Seagal (1 = yes, 0 = no)
0
0
1
1
0
1
Coefficients
4.23
0.80
3.35
Standard Error
7.41
0.14
8.32

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