Case Problem 1 Consumer Research, Inc. Consumer Research, Inc., is an independent agency that conducts research on consumer attitudes and behaviors for a variety of firms. In one study, a client asked for an investigation of consumer characteristics that can be used to predict the amount charged by credit card users. Data were collected on annual income, household size, and annual credit card charges for a sample of 50 consumers. The following data are contained in the file named Consumer. Income ($1,000s) Household Size Amount Charged ($) 54 3 4016 30 2 3159 32 4 5100 50 5 4742 31 2 1864 55 2 4070 37 1 2731 40 2 3348 66 4 4764 51 3 4110 25 3 4208 48 4 4219 27 1 2477 33 2 2514 65 3 4214 63 4 4965 42 6 4412 21 2 2448 44 1 2995 37 5 4171 62 6 5678 21 3 3623 55 7 5301 42 2 3020 41 7 4828 54 6 5573 30 1 2583 48 2 3866 34 5 3586 67 4 5037 50 2 3605 67 5 5345 55 6 5370 52 2 3890 62 3 4705 64 2 4157 22 3 3579 29 4 3890 39 2 2972 35 1 3121 39 4 4183 54 3 3730 23 6 4127 27 2 2921 26 7 4603 61 2 4273 30 2 3067 22 4 3074 46 5 4820 66 4 5149 Managerial Report 1 2 Use methods of descriptive statistics to summarize the data. Comment on the findings. Develop estimated regression equations, first using annual income as the independent variable and then using household size as the independent variable. Which variable is the better predictor of annual credit card charges? Discuss your findings. 3 4 Develop an estimated regression equation with annual income and household size as the independent variables. Discuss your findings. What is the predicted annual credit card charge for a threeperson household with an annual income of $40,000? Discuss the need for other independent variables that could be added to the model. What additional variables might be helpful