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North South University Assignment Submission Managerial Economics BUS 525.4 Fall 2020

The document contains regression analyses of consumption (Con) with GDP, price, and previous year's consumption. It finds that previous year's consumption has a statistically significant positive relationship with current consumption, while GDP and price do not. It then uses the regression equation to estimate consumption in 1984 given values for the variables. The document also contains regression analyses of GPA with IQ, finding a positive relationship, and of income with age, education, and job experience, finding relationships consistent with economic theory. It provides forecasts of GPA and income using the regression equations.

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Safat Arafat
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44 views9 pages

North South University Assignment Submission Managerial Economics BUS 525.4 Fall 2020

The document contains regression analyses of consumption (Con) with GDP, price, and previous year's consumption. It finds that previous year's consumption has a statistically significant positive relationship with current consumption, while GDP and price do not. It then uses the regression equation to estimate consumption in 1984 given values for the variables. The document also contains regression analyses of GPA with IQ, finding a positive relationship, and of income with age, education, and job experience, finding relationships consistent with economic theory. It provides forecasts of GPA and income using the regression equations.

Uploaded by

Safat Arafat
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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North South University

Assignment Submission

Managerial Economics

BUS 525.4

Fall 2020

Submitted To:

Dr. K.M. Zahidul Islam


Professor

School of Business and


Economics, NSU.

Prepared by:

Arafat Arabi

ID: 2016389660
4-16(a)

Regression Analysis: Con versus GNP, Pr, PYC

Variance analysis:

Source DF Adj SS Adj MS F-Value P-Value


Regression 3 177553 59184.5 320.92 0.000
GNP 1 121 120.8 0.66 0.435
Pr 1 94 94.1 0.51 0.490
PYC 1 17513 17513.3 94.96 0.000
Error 11 2029 184.4
Total 14 179582

Model Summary

S R-sq R-sq(adj) R-sq(pred)


13.5801 98.87% 98.56% 98.29%

Coefficients

Term Coef SE Coef T-Value P-Value VIF


Constant 51.5 33.9 1.52 0.157
GNP -0.0301 0.0371 -0.81 0.435 70.00
Pr 12.2 17.1 0.71 0.490 50.63
PYC 0.975 0.100 9.74 0.000 11.28

Regression Equation

Con = 51.5 - 0.0301 GNP + 12.2 Pr + 0.975 PYC

Where, Con is consumption, Pr is price and PYC is previous year consumption

Fits and Diagnostics for Unusual Observations

Obs Con Fit Resid Std Resid


6 555.00 584.52 -29.52 -2.39 R

R Large residual
4-16(b)

To estimate the electricity consumption of for 1984, our regression equation is:

Con = 51.5 - 0.0301 GNP + 12.2 Pr + 0.975 PYC

We have given,
GNP=3661.3
Price of electricity, Pr=7.16
Previous year (1983) consumption, PYC=750.9
Therefore,
Con = 51.5 - 0.0301 GNP + 12.2 Pr + 0.975 PYC
Con = 51.5 - 0.0301 * 3661.3 + 12.2 * 7.16 + 0.975 * 750.9
Con=760.77

So, the estimated electricity consumption in 1984 was 760.77 billion kilowatt-hour.

4-15(a)

Regression Analysis: GPA versus IQ

Analysis of Variance

Source DF Adj SS Adj MS F-Value P-Value


Regression 1 2.701 2.7014 23.38 0.001
IQ 1 2.701 2.7014 23.38 0.001
Error 10 1.155 0.1155
Total 11 3.857

Model Summary

S R-sq R-sq(adj) R-sq(pred)


0.339893 70.04% 67.05% 61.68%

Coefficients

Term Coef SE Coef T-Value P-Value VIF


Constant -4.17 1.42 -2.94 0.015
IQ 0.0550 0.0114 4.84 0.001 1.00
Regression Equation

GPA = -4.17 + 0.0550 IQ


Where, GPA is grade point average

Fits and Diagnostics for Unusual Observations

Obs GPA Fit Resid Std Resid


2 2.200 2.917 -0.717 -2.23 R

R Large residual

The result is consistent because from the regression equation, if we check any value from the IQ,
the GPA calculation we get is very close to the actual value.
For example,
If, IQ=116, we have,

GPA = -4.17 + 0.0550 IQ


GPA = -4.17 + 0.0550 * 116
GPA = 2.21

The actual value from the table is 2.1, so the result is consistent.

4-15(b)

We have:

Regression equation:
GPA = -4.17 + 0.0550 IQ

For IQ = 120,

GPA = -4.17 + 0.0550 * 120


GPA = 2.43

For IQ = 150,

GPA = -4.17 + 0.0550 * 150


GPA = 4.08

The forecast for IQ = 120, we have more confidence because it is consistent with the actual data.
4-14(a)

Income is given in thousand dollars. Converted it to dollar by multiplying 1000 with the
whole column.

Regression Analysis: M versus Age

Analysis of Variance

Source DF Adj SS Adj MS F-Value P-Value


Regression 1 455386684 455386684 6.00 0.025
Age 1 455386684 455386684 6.00 0.025
Error 18 1365038816 75835490
Lack-of-Fit 13 830527150 63886704 0.60 0.790
Pure Error 5 534511667 106902333
Total 19 1820425500

Model Summary

S R-sq R-sq(adj) R-sq(pred)


8708.36 25.02% 20.85% 7.27%

Coefficients

Term Coef SE Coef T-Value P-Value VIF


Constant 9932 6223 1.60 0.128
Age 359 146 2.45 0.025 1.00

Regression Equation

M = 9932 + 359 Age
Where, M is income
Fits and Diagnostics for Unusual Observations

Std
Obs M Fit Resid Resid
20 48300 31468 16832 2.11 R

R Large residual

Explanation of the sign of Age coefficient:

The sign of age coefficient is positive meaning the slope is positive. So, there is a positive
relationship between the age with the income.

4-14(b)

Regression Analysis: M versus Age, Ed, Je

Analysis of Variance

Source DF Adj SS Adj MS F-Value P-Value


Regression 3 1591366168 530455389 37.05 0.000
Age 1 53140921 53140921 3.71 0.072
Ed 1 1123999631 1123999631 78.51 0.000
Je 1 236871414 236871414 16.55 0.001
Error 16 229059332 14316208
Total 19 1820425500
Model Summary

S R-sq R-sq(adj) R-sq(pred)


3783.68 87.42% 85.06% 78.6

Coefficients

Term Coef SE Coef T-Value P-Value VIF


Constant -7060 3368 -2.10 0.052
Age -211 110 -1.93 0.072 2.98
Ed 2245 253 8.86 0.000 1.71
Je 1024 252 4.07 0.001 2.5

Regression Equation

M = -7060 - 211 Age + 2245 Ed + 1024 Je


Where, M is income, Ed is education and Je job experience
Fits and Diagnostics for Unusual Observations

Obs M Fit Resid Std Resid


4 8800 16845 -8045 -2.25 R

R Large residual

Explanation for the result of part (b) from part (a):

The regression equation says there is a positive correlation of education and job experience with
income, but a negative correlation between age and income. This can be described as with the
increase of age, if there is not enough education and high job experience, the income cannot be
higher. People who are highly educated and have more job experience get higher salary with the
increase of age.

4-14(c)

From part (b):


Regression Equation

M = -7060 - 211 Age + 2245 Ed + 1024 Je

When,
Education, Ed=14
Job Experience, Je=10
Age=45
We have:
M = -7060 - 211 * 45 + 2245 * 14 + 1024 *10
M = 25,115

So, Income = 25,125.


4-17(a)

Income is given in thousand dollars. Converted it to dollar by multiplying 1000 with the
whole column.

Regression Analysis: LnQx versus LnPx, LnM, LnPr

Analysis of Variance

Source DF Adj SS Adj MS F-Value P-Value


Regression 3 0.628924 0.209641 151.44 0.000
LnPx 1 0.020570 0.020570 14.86 0.005
LnM 1 0.007797 0.007797 5.63 0.045
LnPr 1 0.000525 0.000525 0.38 0.555
Error 8 0.011075 0.001384
Total 11 0.639999

Model Summary

S R-sq R-sq(adj) R-sq(pred)


0.0372068 98.27% 97.62% 95.62%

Coefficients

Term Coef SE Coef T-Value P-Value VIF


Constant -8.94 6.00 -1.49 0.175
LnPx -2.210 0.573 -3.85 0.005 17.72
LnM 1.434 0.604 2.37 0.045 16.28
LnPr 0.500 0.811 0.62 0.555 42.75

Regression Equation:

LnQx = -8.94 - 2.210 LnPx + 1.434 LnM + 0.500 LnPr

Where, LnQx is natural logarithm of Hamburger consumption, LnPx is natural logarithm


of hamburger price, LnM is natural logarithm of income, LnPr is natural logarithm of hot
dog price
4-17(b)

Price elasticity= -2.210

Income elasticity= 1.434

Cross elasticity= 0.500 

Now, Cross elasticity shows the percentage change in the quantity demanded of Hot dog Price in
response to a change in the price of Hamburger Price.

Since the cross elasticity of demand is positive, therefore, we can say that Hotdog and
Hamburger are substitute to each other. Hence both are similar type of good and in market they
are substitute to each other, so this result is consistent with economic theory.

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