Eco Chapter 6 Problems Set 2015

1) Label as consistent or inconsistent. Consistent or Inconsistent? (worth 25 points total)

a) Yhat = 503 + .35X and r = -.75 ?

b) Yhat = 323 + .85X and r = .75 ?

c) Yhat = 123 - .15X and r = -.75 ?

d) Yhat = 578 - .67X and r = .75 ?

e) Yhat = 58 - .72X and r = -.15 ?

2) Consider the following data. X = Weekly Advertising expenditures and Y = Weekly Sales. (worth 24 points total)

Y X

1260 42

1390 55

1435 63

1435 55

1460 49

1310 47

1410 63

1520 62

1585 65

1660 72

a) Create the ANOVA table using Excel or Minitab.

b) What is the prediction equation? ?

c) What is your prediction of sales if you spend $50 on advertising? ?

d) Does the amount of advertising expenditures have any relationship to sales?

Briefly explain your answer.

3) You own a bookstore. You have records for the number of books sold and the number

of feet of shelf space used for those books. Use this information to answer

the questions below. (worth 24 points)

# of Books Sold Feet of Shelf Space

Week Y X

1 275 6.8

2 142 3.3

3 168 4.1

4 197 4.2

5 215 4.8

6 188 3.9

7 241 4.9

8 295 7.7

9 125 3.1

10 266 5.9

11 200 5

a) Is there a linear relationship between the number of books sold and the amount of shelf

space? ?

b) Determine the least squares line that represents the relationship. ?

c) You received a new shipment of books. If you give them 4 feet of shelf space,

how many books do you expect to sell? ?

d) You have 250 books to sell. You want to sell them all. How many feet of shelf space

should you allow in order to sell all 250.

4) Use the manufacturing data below to answer the following questions. (worth 24 points)

Year Manufacturing Direct Labor Hours Manufacturing Overhead

2002 1,200 $73,000

2003 1,500 $97,000

2004 2,300 $128,000

2005 2,700 $155,000

2006 3,300 $175,000

2007 3,400 $218,000

a) Is there a linear relationship between Manufacturing Direct Labor Hours and

Manufacturing Overhead? If so, what type of relationship? ?

b) For 2008, what is the expected Manufacturing Overhead if Manufacturing Direct

Labor Hours are expected to be 2,100? ?

c) Manufacturing Direct Labor Hours explain about how much of

Manufacturing Overhead? ?

d) What is the equation? ?

5) A lower coefficient of determination is better for forecasting. (worth 3 points)

True or False ?