Case

1. Use Minitab (and the Minitab Tutorial) to run the multiple regression.  Evaluate the first order model. Run the scatter plots of each of the independent variables against the dependent variable. Interpret the scatter plots.  Tell us what you think is going on here. 

2. For the Bid-Rigging Case, examine the p-values for each of the independent variables, and re-run the multiple regression, dropping any independent variables for which the p-value is >= .1.  Why would we drop any independent variables for which the p-value is >= .1?  What are the null and alternative hypotheses for each of the independent variables?  Be sure to look at the Week 7 Lecture for a summary of the elements of a multiple regression analysis.  Attach your Minitab output.

 

Interpreting the confidence intervals of the regression coefficients…

Interpret the confidence intervals of the regression coefficients of each of the significant independent variables, using the units of the variables.  Include as an Attachment to your post your Minitab output, highlighting the relevant portions of the Minitab output.

The case

In the United States, commercial contractors bid for the right to construct state highways and roads. A state government agency, usually the Department of Transportation (DOT), notifies various contractors of the state’s intent to build a highway. Sealed bids are submitted by the contractors, and the contractor with the lowest bid (building cost) is awarded the road construction contract. The bidding process works extremely well in competitive markets but has the potential to increase construction costs if the markets are noncompetitive or if collusive practices are present. The latter occurred in the 1980s in Florida. Numerous road contractors either admitted or were found guilty of price fixing (i.e., setting the cost of construction above the fair, or competitive, cost through bid-rigging or other means).

This Statistics in Action involves data collected by the Florida attorney general shortly following the price-fixing crisis. The attorney general’s objective is to build a model for the cost (y) of a road construction contract awarded using the sealed-bid system. The FLAG file contains data for a sample of 235 road contracts.