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##### Regression - Multiple Choice Questions

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Question;Run a regression using the following variables: price of roses (Rosepr), the price of carnations(CarnatPr), the trend variable (time), Births, Deaths, Wedding, Unemp, Income as well as aconstant. Answer questions 1-10 based on this model.1.Which of the following is true of the expected coefficients in the model?A) Births, deaths, wedding, price of carnations, and income are expected to be positive and theprice of roses and unemployment are expected to be negative.B) Births, deaths, wedding, and income are expected to be positive and the price of roses, priceof carnations, and unemployment are expected to be negative.C) Price of carnations and income are expected to be positive and births, deaths, wedding, theprice of roses and unemployment are expected to be negative.D) none of the above2.The price elasticity for roses is approximatelyA) -10.9B) -3.7C) -1.9D) none of the above3.The cross price elasticity for roses and carnations is approximatelyA) 2.0B) 3.2C) 4.5D) none of the above4.The coefficient associated with the price of roses can be interpreted as follows: For every $1increase in the price of a dozen roses, there are 2526.23 dozen less sold holding all othervariables constant.A) TrueB) False5.The estimated coefficient for wedding is found to be approximatelyA) 0.47 and is insignificant.B) 0.12 and is significant at the.01 level.C) -0.29 and is insignificant.D) none of the above.6.The estimated coefficient for Deaths is found to be insignificant and therefore should bedropped from the regression model.A) TrueB) False7.Which of the following pairs of variables exhibits the highest degree of multicollinearity?A) wedding and eventsB) births and eventsC) income and unemploymentD) none of the above.8.Which of the following statements best represents the interpretation of the R2 for this model?A) The variables included in the model explain 91.9% of the variation in the number of dozensof roses sold.B) The variables included in the model explain 97.9% of the variation in the number of dozens ofroses sold.C) The variables included in the model explain 95.5% of the variation in the number of dozens ofroses sold.D) none of the above9.Which of the following statements best represents the interpretation of the explanatory powerof the R2 for this model?A) The F-critical is greater than the F-statistic so we can reject the null hypothesis of noexplanatory power for the model.B) The F-critical is less than the F-statistic so we cannot reject the null hypothesis of noexplanatory power for the model.C) The F-critical is greater than the F-statistic so we cannot reject the null hypothesis of noexplanatory power for the model.D) none of the above10.According to the coefficient associated with the trend variable, the number of dozens of rosessold was decreasing at a rate of 472.67% per quarter more than could be explained by changes inthe other variables.A) TrueB) FalseSuppose the florists believe that first-quarter sales are greater than sales in any other quarter.Create and define a variable(s) that will allow you to test this hypothesis. Re-estimate theequation with your new variable and answer question 11.11.The florists are correct about the first-quarter sales being greater than sales in any otherquarter.A) TrueB) False12.A potential shortcoming of this model could beA) the high degree of substitutability between the price of roses and the price of carnationsB) multicollinearity between sales of roses and the price of carnationsC) an omitted variable such as green plant priceD) none of the above

Paper#61501 | Written in 18-Jul-2015

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