Statistics for Business: Decision Making and Analysis, 3rd Edition

You Do It

1. 31. Gold Chains

   1. No, the correlation is 0.966. Yes, but with collinearity.

   2. Yes

   3. VIF ≈ 15. Collinearity increases the standard errors by about 4 times.

   4. For chains of a given width, the retailer charges about 12 cents per additional mm³.

   5. Collinearity; the negative slope for width indicates that our estimate of the amount of gold provided by the volume variable is off for the wider chains.

      R2	0.9947
      se	16.7231
      n	28

      Term	Estimate	Std Error	t Ratio	Prob > |t|
      Intercept	56.5215	16.3145	3.46	0.0019
      Width (mm)	− 31.0150	13.2988	− 2.33	0.0280
      Volume (cu mm)	0.1187	0.0060	19.83	< .0001

2. 33. Download

   1. F ≈ 64, which is statistically significant.

   2. No, because the absolute value of neither t is larger than 2.

   3. VIF ≈ 42. Collinearity ...