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In a regression analysis involving 30 observations, the following estimated regression equation was obtained. \\[\hat{y}=17.6+3.8 x_{1}-2.3 x_{2}+7.6 x_{3}+2.7 x_{4}\\] a. Interpret \(b_{1}, b_{2}, b_{3},\) and \(b_{4}\) in this estimated regression equation. b. Estimate \(y\) when \(x_{1}=10, x_{2}=5, x_{3}=1,\) and \(x_{4}=2\)

Short Answer

Expert verified
The coefficients \(b_1, b_2, b_3, b_4\) show how \(y\) changes with \(x_1, x_2, x_3, x_4\). Estimated \(y = 57.1\).

Step by step solution

01

Interpret the Coefficient \(b_1\)

The coefficient \(b_1 = 3.8\) in the regression equation represents the change in the predicted value of \(y\) for each one-unit increase in \(x_1\), assuming that all other variables \(x_2, x_3,\) and \(x_4\) remain constant. Specifically, for every additional unit increase in \(x_1\), \(y\) is expected to increase by 3.8 units.
02

Interpret the Coefficient \(b_2\)

The coefficient \(b_2 = -2.3\) indicates that for each one-unit increase in \(x_2\), the predicted value of \(y\) decreases by 2.3 units, with all other variables held constant. This negative coefficient suggests an inverse relationship between \(x_2\) and \(y\).
03

Interpret the Coefficient \(b_3\)

The coefficient \(b_3 = 7.6\) implies that for each one-unit increase in \(x_3\), \(y\) is expected to increase by 7.6 units, assuming that \(x_1, x_2,\) and \(x_4\) are constant. This indicates a positive relationship between \(x_3\) and \(y\).
04

Interpret the Coefficient \(b_4\)

The coefficient \(b_4 = 2.7\) tells us that for each one-unit increase in \(x_4\), the predicted value of \(y\) increases by 2.7 units, all else being equal. This suggests a positive effect of \(x_4\) on \(y\).
05

Plug in Values to Estimate \(y\)

Substitute the given values into the regression equation: \(x_1 = 10\), \(x_2 = 5\), \(x_3 = 1\), and \(x_4 = 2\).\[y = 17.6 + 3.8(10) - 2.3(5) + 7.6(1) + 2.7(2)\]Do the arithmetic to estimate \(y\).
06

Calculate Each Term

Compute each term separately:- Calculate: \(3.8 \times 10 = 38.0\)- Calculate: \(-2.3 \times 5 = -11.5\)- Calculate: \(7.6 \times 1 = 7.6\)- Calculate: \(2.7 \times 2 = 5.4\)
07

Sum the Terms to Find \(y\)

Add all variable contributions to the intercept:\[y = 17.6 + 38.0 - 11.5 + 7.6 + 5.4 = 57.1\]
08

Final Answer

The estimated value of \(y\) when \(x_1 = 10\), \(x_2 = 5\), \(x_3 = 1\), and \(x_4 = 2\) is 57.1.

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Key Concepts

These are the key concepts you need to understand to accurately answer the question.

Regression Coefficients
In regression analysis, coefficients are crucial components of the regression equation. They tell us how much the dependent variable, often denoted as \(y\), is expected to increase or decrease with a one-unit change in one of the independent variables, while keeping all other variables constant.

For the given regression equation: \[\hat{y}=17.6+3.8 x_{1}-2.3 x_{2}+7.6 x_{3}+2.7 x_{4}\] we have four coefficients, each corresponding to one of the independent variables \(x_{1}\), \(x_{2}\), \(x_{3}\), and \(x_{4}\).

  • \(b_1 = 3.8\): For each additional unit of \(x_1\), the predicted \(y\) increases by 3.8 units.
  • \(b_2 = -2.3\): For each additional unit of \(x_2\), the predicted \(y\) decreases by 2.3 units, indicating an inverse relationship.
  • \(b_3 = 7.6\): For each additional unit of \(x_3\), the predicted \(y\) increases by 7.6 units.
  • \(b_4 = 2.7\): For each additional unit of \(x_4\), the predicted \(y\) increases by 2.7 units.
Interpretation of Coefficients
Interpreting coefficients in a regression equation helps us understand the impact of each variable on the predicted outcome. Let's explore each coefficient in our regression context.

The **coefficient \(b_1 = 3.8\)** suggests that, with an increase in \(x_1\) by one unit, the dependent variable \(y\) is expected to rise by 3.8 units. All other variables remain unchanged during this interpretation.

The **coefficient \(b_2 = -2.3\)** indicates a decrease of 2.3 units in \(y\) for each unit increment in \(x_2\). This negative coefficient shows an inverse relationship between \(x_2\) and \(y\).

When considering **\(b_3 = 7.6\)**, a one-unit increase in \(x_3\) leads to a rise in \(y\) by 7.6 units. The correlation here is positive, suggesting that as \(x_3\) increases, so does \(y\).

Finally, **\(b_4 = 2.7\)** implies that \(y\) will increase by 2.7 units with each one-unit rise in \(x_4\). The positive sign reflects a direct positive influence of \(x_4\) on \(y\).
Predicted Values
Predicted values in regression help determine what \(y\) would be, based on specific values of the independent variables, \(x\). Let's use the provided regression equation and plug in the values for \(x_1 = 10\), \(x_2 = 5\), \(x_3 = 1\), and \(x_4 = 2\).

To find the predicted value of \(y\), substitute these values:
\[ y = 17.6 + 3.8(10) - 2.3(5) + 7.6(1) + 2.7(2) \]
Calculate each component separately:

  • \(3.8 \times 10 = 38.0\)
  • \(-2.3 \times 5 = -11.5\)
  • \(7.6 \times 1 = 7.6\)
  • \(2.7 \times 2 = 5.4\)

Add these results to the intercept, 17.6, to find the predicted \(y\):
\[ y = 17.6 + 38.0 - 11.5 + 7.6 + 5.4 = 57.1 \]

Thus, the estimated value of \(y\) given the specified \(x\) values is 57.1. This process reveals how the regression model predicts \(y\) using specific input values.

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Most popular questions from this chapter

The following estimated regression equation was developed for a model involving two independent variables. \\[\hat{y}=40.7+8.63 x_{1}+2.71 x_{2}\\] After \(x_{2}\) was dropped from the model, the least squares method was used to obtain an estimated regression equation involving only \(x_{1}\) as an independent variable. \\[\hat{y}=42.0+9.01 x_{1}\\] a. Give an interpretation of the coefficient of \(x_{1}\) in both models. b. Could multicollinearity explain why the coefficient of \(x_{1}\) differs in the two models? If so, how?

Consider a regression study involving a dependent variable \(y,\) a quantitative independent variable \(x_{1},\) and a qualitative variable with two levels (level 1 and level 2 ). a. Write a multiple regression equation relating \(x_{1}\) and the qualitative variable to \(y\) b. What is the expected value of \(y\) corresponding to level 1 of the qualitative variable? c. What is the expected value of \(y\) corresponding to level 2 of the qualitative variable? d. Interpret the parameters in your regression equation.

Barron's conducts an annual review of online brokers, including both brokers that can be accessed via a Web browser, as well as direct-access brokers that connect customers directly with the broker's network server. Each broker's offerings and performance are evaluated in six areas, using a point value of \(0-5\) in each category. The results are weighted to obtain an overall score, and a final star rating, ranging from zero to five stars, is assigned to each broker. Trade execution, ease of use, and range of offerings are three of the areas evaluated. A point value of 5 in the trade execution area means the order entry and execution process flowed easily from one step to the next. A value of 5 in the ease of use area means that the site was easy to use and can be tailored to show what the user wants to see. A value of 5 in the range offerings area means that all of the investment transactions can be executed online. The following data show the point values for trade execution, ease of use, range of offerings, and the star rating for a sample of 10 of the online brokers that Barron's evaluated (Barron's, March 10,2003 ). $$\begin{array}{lcccc} \text { Broker } & \text { Trade Execution } & \text { Use } & \text { Range } & \text { Rating } \\ \text { Wall St. Access } & 3.7 & 4.5 & 4.8 & 4.0 \\ \text { E*TRADE (Power) } & 3.4 & 3.0 & 4.2 & 3.5 \\ \text { E*TRADE (Standard) } & 2.5 & 4.0 & 4.0 & 3.5 \\ \text { Preferred Trade } & 4.8 & 3.7 & 3.4 & 3.5 \\ \text { my Track } & 4.0 & 3.5 & 3.2 & 3.5 \\ \text { TD Waterhouse } & 3.0 & 3.0 & 4.6 & 3.5 \\ \text { Brown \& Co. } & 2.7 & 2.5 & 3.3 & 3.0 \\ \text { Brokerage America } & 1.7 & 3.5 & 3.1 & 3.0 \\ \text { Merrill Lynch Direct } & 2.2 & 2.7 & 3.0 & 2.5 \\ \text { Strong Funds } & 1.4 & 3.6 & 2.5 & 2.0\end{array}$$ a. Determine the estimated regression equation that can be used to predict the star rating given the point values for execution, ease of use, and range of offerings. b. Use the \(F\) test to determine the overall significance of the relationship. What is the conclusion at the .05 level of significance? c. Use the \(t\) test to determine the significance of each independent variable. What is your conclusion at the .05 level of significance? d. Remove any independent variable that is not significant from the estimated regression equation. What is your recommended estimated regression equation? Compare the \(R^{2}\) with the value of \(R^{2}\) from part (a). Discuss the differences.

The Buyer's Guide section of the Web site for Car and Driver magazine provides reviews and road tests for cars, trucks, SUVs, and vans. The average ratings of overall quality, vehicle styling, braking, handling, fuel economy, interior comfort, acceleration, dependability, fit and finish, transmission, and ride are summarized for each vehicle using a scale ranging from 1 (worst) to 10 (best). A portion of the data for 14 Sports/GT cars is shown here (http://www.caranddriver.com, January 7, 2004). $$\begin{array}{lcccc} \text { Sports/GT } & \text { Overall } & \text { Handling } & \text { Dependability } & \text { Fit and Finish } \\ \text { Acura 3.2CL } & 7.80 & 7.83 & 8.17 & 7.67 \\ \text { Acura RSX } & 9.02 & 9.46 & 9.35 & 8.97 \\ \text { Audi TT } & 9.00 & 9.58 & 8.74 & 9.38 \\ \text { BMW 3-Series/M3 } & 8.39 & 9.52 & 8.39 & 8.55 \\ \text { Chevrolet Corvette } & 8.82 & 9.64 & 8.54 & 7.87 \\ \text { Ford Mustang } & 8.34 & 8.85 & 8.70 & 7.34 \\ \text { Honda Civic Si } & 8.92 & 9.31 & 9.50 & 7.93 \\ \text { Infiniti G35 } & 8.70 & 9.34 & 8.96 & 8.07 \\ \text { Mazda RX-8 } & 8.58 & 9.79 & 8.96 & 8.12 \\ \text { Mini Cooper } & 8.76 & 10.00 & 8.69 & 8.33 \\ \text { Mitsubishi Eclipse } & 8.17 & 8.95 & 8.25 & 7.36 \\ \text { Nissan 350Z } & 8.07 & 9.35 & 7.56 & 8.21 \\ \text { Porsche 911 } & 9.55 & 9.91 & 8.86 & 9.55 \\ \text { Toyota Celica } & 8.77 & 9.29 & 9.04 & 7.97 \end{array}$$ a. Develop an estimated regression equation using handling, dependability, and fit and finish to predict overall quality. b. Another Sports/GT car rated by Car and Driver is the Honda Accord. The ratings for handling, dependability, and fit and finish for the Honda Accord were \(8.28,9.06,\) and \(8.07,\) respectively. Estimate the overall rating for this car. c. Provide a \(95 \%\) confidence interval for overall quality for all sports and GT cars with the characteristics listed in part (a). d. Provide a \(95 \%\) prediction interval for overall quality for the Honda Accord described in part (b). e. The overall rating reported by Carand Driver for the Honda Accord was \(8.65 .\) How does this rating compare to the estimates you developed in parts (b) and (d)?

A 10 -year study conducted by the American Heart Association provided data on how age, blood pressure, and smoking relate to the risk of strokes. Assume that the following data are from a portion of this study. Risk is interpreted as the probability (times 100 ) that the patient will have a stroke over the next 10 -year period. For the smoking variable, define a dummy variable with 1 indicating a smoker and 0 indicating a nonsmoker. $$\begin{array}{cccc} \text { Risk } & \text { Age } & \text { Pressure } & \text { Smoker } \\ 12 & 57 & 152 & \text { No } \\ 24 & 67 & 163 & \text { No } \\ 13 & 58 & 155 & \text { No } \\ 56 & 86 & 177 & \text { Yes } \\ 28 & 59 & 196 & \text { No } \\ 51 & 76 & 189 & \text { Yes } \\ 18 & 56 & 155 & \text { Yes } \\ 31 & 78 & 120 & \text { No } \\ 37 & 80 & 135 & \text { Yes } \\ 15 & 78 & 98 & \text { No } \\ 22 & 71 & 152 & \text { No } \\ 36 & 70 & 173 & \text { Yes } \\ 15 & 67 & 135 & \text { Yes } \\ 48 & 77 & 209 & \text { Yes } \\ 15 & 60 & 199 & \text { No } \\ 36 & 82 & 119 & \text { Yes } \\ 8 & 66 & 166 & \text { No } \\ 34 & 80 & 125 & \text { Yes } \\ 3 & 62 & 117 & \text { No } \\ 37 & 59 & 207 & \text { Yes } \end{array}$$ a. Develop an estimated regression equation that relates risk of a stroke to the person's age, blood pressure, and whether the person is a smoker. b. Is smoking a significant factor in the risk of a stroke? Explain. Use \(\alpha=.05\) c. What is the probability of a stroke over the next 10 years for Art Speen, a 68 -year-old smoker who has blood pressure of \(175 ?\) What action might the physician recommend for this patient?

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