Business Statistics

ECON 2110 Dr. Martin Gritsch

Paper Assignment – Part 2

A reminder about Academic Integrity from the syllabus:

Cheating in its various forms will be severely punished. The minimum penalty is a grade of zero on the assignment in question, but it can go up to expulsion from the university. If you have not done so yet, please familiarize yourself with the “Academic Integrity Policy” (available online at http://www.wpunj.edu/dotAsset/230122.pdf). All parts of that Policy are relevant and important, but for the online setting of the class, I especially would like to stress sections II.B. (on plagiarism) and II.C. (on collusion).

Please make sure that you truly understand what all parts of the policy mean. To name a few examples, working together with another student on an assignment, getting help on an assignment from someone else (e.g., a tutor), and copying another student’s work are all violations of the Academic Integrity Policy.

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This second part of the paper will be worth 15 percent towards your final score. However, if your revised version (to be submitted later) is an improvement over this version, I will weigh this version with 7.5 percent and the final version accordingly more.

I expect this paper to be about equal in length to the first part of the paper.

Required steps for this part of the assignment follow.

Section 1: Data Analysis

Using the same data set that you have been working with in the first part of the paper, please carry out the following steps:

1.1 Regress “maintenance cost” on the “engine type” dummy variable by which you divided the data set in the previous assignment.

1.2 Regress your “maintenance cost” on two variables: the “engine type” dummy variable from the previous regression and an additional independent variable. (You will need to justify below why you decided to include this particular variable.) The way we enter the necessary information in Excel requires that your independent variables are in adjacent columns. In case they are not currently next to each other and you do not know how to move the one column next to the other, please see http://office.microsoft.com/en-us/excel-help/move-rows-or-columns-HP005201464.aspx. If that does not help, please send me an e-mail.

Section 2: Reporting Your Results

For each step of the data analysis that you carried out above, you must again copy and paste the results into your paper. The subsequent explanation of what the results mean is crucial. Once again, your explanations should be geared to a high school graduate who has not taken a college-level course in statistics. You need to address the following items.

For the regression with only the dummy variable as independent variable (1.1 above) Go back to the t-test from the first part of the paper. (If I indicated in my feedback to your first part of the paper that something was wrong with the way you had done the t-test, please go back and fix that first and use the corrected output for this step.) The means for the two groups are part of the t-test output. Subtract the one mean from the other and compare your result to the coefficient estimate from the regression. What do you observe? Why does that make sense?

What is the p-value of the test for “H0: the slope coefficient on the dummy variable is zero in the population”? (This is just what we call the test for statistical significance.) What is the p-value of the test for “H0: the slope coefficient on all variables is zero in the population”? (We called that the global test for overall significance.) How do the two p-values compare to each other and why does that make sense?

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For the regression with the dummy variable and the other variable of your choice as independent variables (1.2 above) - Explain why you think the second independent variable that you included in your regression will have an impact on the dependent variable. - For both coefficient estimates, - State what your coefficient estimate is. - Interpret the coefficient estimate. - Do you feel that your estimate is of practical significance? Justify your answer.

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