DECLARATION OF ACADEMIC INTEGRITY

DECLARATION OF ACADEMIC INTEGRITY
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and that I did not copy (in whole or in part) the work of any other individual.
• I also declare that, subsequent to receiving the assigned work, unless it was precisely stated
that it was group work, that I did not discuss the questions, or possible answers, with any
other person, either face to face or electronically.
• By submitting this declaration I agree to any level of scrutiny deemed necessary to determine
whether I have violated TRU Policy ED-9.0 Academic Integrity and Student Conduct.
1
QUESTION
1. (20 points) The data file TRU-TOWN contains observations on 500 single-family houses sold
in Kamloops, during 2019-2020. The data include sale price (in thousands of dollars), PRICE,
and total interior area of the house in hundreds of square feet, SQFT.
a. Plot house price against house size in a scatter diagram.
b. Estimate the linear regression model P RICE = β1 + β2SQF T + . Interpret the estimates.
Draw a sketch of the fitted line.
c. Estimate the quadratic regression model P RICE = α1 + α2SQF T2 + .
d. Graph the fitted curve for the model in part (c). On the graph, sketch the line that is
tangent to the curve for a 2000-square-foot house.
e. For the regressions in (b) and (c), compute the least squares residuals and plot them
against SQFT. Do any of our assumptions appear violated?
f. One basis for choosing between these two specifications is how well the data are fit by
the model. Compare the sum of squared residuals (SSE) from the models in (b) and (c).
Which model has a lower SSE? How does having a lower SSE indicate a ‘‘better-fitting’’
model?
2. (20 points) Environment Canada’s Fuel Economy Guide provides fuel efficiency data for 2020
model year cars and trucks. The Fuel Efficiency data is attached. The column labeled
Manufacturer shows the name of the company that manufactured the car; the column labeled
Displacement shows the engine’s displacement in liters; the column labeled Fuel shows the
required or recommended type of fuel (regular or premium gasoline); the column labeled Drive
identifies the type of drive (F for front wheel, R for rear wheel, and A for all wheel); and the
column labeled Hwy MPG shows the fuel efficiency rating for highway driving in terms of miles
per gallon. Analyzing Environment Canada’s Fuel Economy Guide data, write a briefing report
that will help the trade department decide on import quota restrictions that may take either
fixed in terms of value or quantity of the cars which can be imported over the coming decades.
In your report, include: Estimated regression equation that you would recommend to predict
the fuel efficiency for highway driving given the engine’s displacement, the dummy variable
FuelPremium, and the dummy variables FrontWheel and RearWheel; an interpretation of the
estimated regression coefficients for this equation and test for overall significance and individual
significance at α = 0.05 and discussion of your findings and conclusions.
3. (20 points) Fortune magazine publishes an annual list of the 100 best companies to work for.
The data is provided in the file named Fortune-Best and it shows a portion of the data for a
random sample of 30 of the companies that made the top 100 list for 2020. The column labeled
Rank shows the rank of the company in the Fortune 100 list; the column labeled Size indicates
whether the company is a small, midsize, or large company; the column labeled Salaried ($1000s)
shows the average annual salary for salaried employees rounded to the nearest $1000; and the
column labeled Hourly ($1000s) shows the average annual salary for hourly employees rounded
to the nearest $1000. Fortune defines large companies as having more than 10,000 employees,
midsize companies as having between 2500 and 10,000 employees, and small companies as
having fewer than 2500 employees.
a. Use methods of descriptive statistics to summarize the Fortune-Best data and comment
on your findings.
b. Based upon the results of your analysis, what estimated regression equation would you
recommend to predict the average annual salary for salaried employees given the average
annual salary for hourly employees and the size of the company. Provide an interpretation
of the estimated regression coefficients for this equation.
c. Determine the significance of the independent variables.. Discuss the need for other
independent variables that could be added to the model. What additional variable/s might
be helpful?
4. (20 points) When trying to decide what car to buy, real value is not necessarily determined
by how much you spend on the initial purchase. Instead, cars that are reliable and don’t cost
much to own often represent the best values. But no matter how reliable or inexpensive a car
may cost to own, it must also perform well.
To measure value, Consumer Reports developed a statistic referred to as a value score. The
value score is based upon five-year owner costs, overall road-test scores, and predicted-reliability
ratings. Five-year owner costs are based upon the expenses incurred in the first five years of
ownership, including depreciation, fuel, maintenance and repairs, and so on. Using a national
average of 12,000 miles per year, an average cost per mile driven is used as the measure of
five-year owner costs. Road-test scores are the results of more than 50 tests and evaluations
and are based on a 100-point scale, with higher scores indicating better performance, comfort,
convenience, and fuel economy. The highest road-test score obtained in the tests conducted
by Consumer Reports was a 99 for a Lexus LS 460L. Predicted-reliability ratings (1 = Poor, 2
= Fair, 3 = Good, 4 = Very Good, and 5 = Excellent) are based upon data from Consumer
Reports’ Annual Auto Survey.
A car with a value score of 1.0 is considered to be an ‘‘average-value” car. A car with a value
score of 2.0 is considered to be twice as good a value as a car with a value score of 1.0; a car
with a value score of 0.5 is considered half as good as average; and so on. The data for three
sizes of cars (13 small sedans, 20 family sedans, and 21 upscale sedans), including the price ($)
of each car tested, are contained in the file named Car-Values. You may use dummy variables
to incorporate the effect of size of car[categorical variable with three values]. Your report should
include:
a. an estimated regression with Family-Sedan and Upscale-Sedan as the independent variables,
and treating Cost/Mile as the dependent variable. Discuss your findings.
b. Estimated regression equation using Cost/Mile, Road-Test Score, Predicted Reliability,
Family-Sedan, and Upscale-Sedan as the independent variables, and treating Value Score
as the dependent variable.
c. Delete any independent variables that are not significant from the estimated regression
equation developed using α = 0.05 level of significance. After deleting any independent
variables that are not significant, develop a new estimated regression equation