Question
1. Data 3-10 has cross sectional data on total 1995 sales and profits for 27 German companies. Use Excel to estimate the model (in other
1. Data 3-10 has cross sectional data on total 1995 sales and profits for 27 German companies. Use Excel to estimate the model (in other words, run the regression): Profits i = i + SALESi + i
here
a. Draw a scatter plot with profits on the Y axis. Compute the R2 from the Excel regression printout. Is the regression line a good fit for the data? Explain what variable you are looking at to arrive at your conclusion.
b. In one or two sentences, state what the regression results imply about the relationship between profits and sales. Do the results coincide with what you expected? Explain.
c. Based on the Significance F, is the overall regression statistically significant from zero? Explain how you arrived at that conclusion.
d. Is the coefficient of Sales statistically significant (from zero)? Explain how you arrived at that conclusion.
DATA 3-10:
profits:
629
1214
1254
1567
1119
711
1618
180
183
349
232
453
757
168
238
118
191
490
211
163
90
243
145
168
160
90
26
sales:
36.617
58.112
43.421
29.186
34.16
41.628
30.265
16.892
1.199
21.011
57.69
30.21
27.69
3.706
9.295
5.861
12.332
25.613
5.423
3.042
9.952
17.253
3.499
12.178
2.292
13.901
17.747
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