Statistical Techniques in Business and Economics, 16th Edition
16th Edition
ISBN: 9780078020520
Author: Douglas A. Lind, William G Marchal, Samuel A. Wathen
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 1, Problem 5CE
Explain the difference between qualitative and quantitative variables. Give an example of qualitative and quantitative variables.
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3. Bayesian Inference – Updating Beliefs
A medical test for a rare disease has the following characteristics:
Sensitivity (true positive rate): 99%
Specificity (true negative rate): 98%
The disease occurs in 0.5% of the population.
A patient receives a positive test result.
Questions:
a) Define the relevant events and use Bayes’ Theorem to compute the probability that the patient actually has the disease.b) Explain why the result might seem counterintuitive, despite the high sensitivity and specificity.c) Discuss how prior probabilities influence posterior beliefs in Bayesian inference.d) Suppose a second, independent test with the same accuracy is conducted and is also positive. Update the probability that the patient has the disease.
4. Linear Regression - Model Assumptions and Interpretation
A real estate analyst is studying how house prices (Y) are related to house size in square feet (X). A simple
linear regression model is proposed:
The analyst fits the model and obtains:
•
Ŷ50,000+150X
YBoB₁X + €
•
R² = 0.76
• Residuals show a fan-shaped pattern when plotted against fitted values.
Questions:
a) Interpret the slope coefficient in context.
b) Explain what the R² value tells us about the model's performance.
c) Based on the residual pattern, what regression assumption is likely violated? What might be the
consequence?
d) Suggest at least two remedies to improve the model, based on the residual analysis.
Chapter 1 Solutions
Statistical Techniques in Business and Economics, 16th Edition
Ch. 1 - The Atlanta-based advertising firm Brandon and...Ch. 1 - What is the level of measurement reflected by the...Ch. 1 - What is the level of measurement for each of the...Ch. 1 - The San Francisco Chronicle is a large newspaper...Ch. 1 - For each of the following, determine whether the...Ch. 1 - Explain the difference between qualitative and...Ch. 1 - Explain the difference between a sample and a...Ch. 1 - Prob. 7CECh. 1 - For the following situations, would you collect...Ch. 1 - Exits along Interstate highways were formerly...
Ch. 1 - A poll solicits a large number of college...Ch. 1 - Barnes & Noble recently began selling an...Ch. 1 - Using the concepts of sample and population,...Ch. 1 - Place these variables in the following...Ch. 1 - AVX Home Entertainment, Inc., recently began a...Ch. 1 - The Wall Street Journal’s website, www.wsj.com,...Ch. 1 - The following chart depicts the average amounts...Ch. 1 - The following chart depicts the earnings in...Ch. 1 - Refer to the Real Estate data, which report...Ch. 1 - Refer to the Baseball 2012 data, which report...Ch. 1 - Refer to the Buena School District bus data, which...
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