a. Explanation Given info: A sample of 50 observations is considered with one response variable ( y ), and six independent variables. The model of the firm is E ( y ) = β 0 + β 1 x i . where x i is the i th independent variable. The coefficients and standard errors are given. Calculation: The formula to find the test statistic is, t = β ^ i s β ^ i The best one-variable predictor of y is obtained by selecting the largest absolute t for the independent variables. To obtain the best one-variable predictor of y the absolute test statistic t value should be calculated. For variable x 1 , The value of t is obtained by substituting 1.6 as β ^ 1 , and 0.42 as s β ^ 1 in the test statistic formula, t = β ^ 1 s β ^ 1 = 1.6 0.42 = 3.81 Similarly, Independent variable t = β ^ i s β ^ i x 1 t = 3 b. To determine To Explain: The variables x 2 included in the model at this stage or not. c. To determine To Describe: The next phase that a stepwise procedure would execute.

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ISBN: 9780134596839

Author: MCCLAVE

Publisher: PEARSON

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Chapter 12.10, Problem 12.111LM

To determine

To Explain: Which independent variable is declared the best one-variable predictor of y.

To determine

To Explain: The variables x2 included in the model at this stage or not.

To determine

To Describe: The next phase that a stepwise procedure would execute.

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Chapter 12.9, Problem 12.110ACA

Chapter 12.10, Problem 12.112ACB

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Chapter 12 Solutions

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Which independent variable is declared the best one-variable predictor of y .

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To Explain: Which independent variable is declared the best one-variable predictor of y.

To Explain: The variables x2 included in the model at this stage or not.

To Describe: The next phase that a stepwise procedure would execute.

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