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COMM 291 ASSIGNMENT 5 Fall 2014

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Question

Question 3 Small Business (7 points)

 

The director of a small business development center located in a mid-sized city is reviewing data

 

about its clients. In particular, shes interested in examining if the distribution of business owners

 

across the various stages of business life cycle is the same for white-owned and visible-minorityowned businesses. The data are shown in the table below:

 

Stages in Business

 

Planning

 

Starting

 

Managing

 

Getting Out

 

 

Business ownership

 

White-owned

 

Visible-minority-owned

 

11

 

9

 

14

 

11

 

20

 

2

 

15

 

1

 

 

a) Will you test goodness-of-fit or homogeneity (independence)? (.5 point)

 

b) Write the appropriate hypothesis. (.5 point)

 

c) Find the expected counts for each cell and explain why chi-square procedure are not

 

appropriate for this table. (1 point)

 

d) Create a new table by combining categories so that a chi-square procedure can be used. (1

 

point)

 

 

e) With this change in the table, what has happened to the degrees of freedom? (.5 point)

 

f) Test the hypothesis about the two groups and state the appropriate conclusion. (3.5 points)

 

 

Question 4 Seasonal spending (8 points)

 

Spending on credit cards decreases after the holiday spending season (as measured by amount

 

charged on a credit card in December). The data set in the file (Asst5_2014_Data.xlsx) contains

 

 

the monthly credit card charges of a random sample of 99 cardholders.

 

a) Check the conditions of a regression model for the dataset. (3.5 point)

 

 

b) Build a regression model to predict January spending from Decembers spending. (1 point)

 

 

c) How much, on average, will cardholders who charged $2000 in December charge in

 

January? (.5 point)

 

 

d) Give a 95% confidence interval for the average January charges of cardholders who charged

 

$2000 in December? (1.5 points)

 

e) From part d), give a 95% confidence interval for the average decrease in the charges of

 

cardholders who charged $2000 in December? (1 point)

 

 

f) What reservations, if any, do you have about the confidence intervals you made in part d)

 

and e)? (.5 point)

 

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