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 Consumer.

A. Develop scatter plots of amount charged versus annual income, and amount charged versus household size. Comment on the relationship between amount charged and these two variables.

B. Develop an estimated regression equation that can be used to predict the amount charged given the two independent variables (annual income, and household size).

C. Interpret the coefficients on the annual income, and household size variables.

D. Do a residual plot of standard residuals on the predicted values. Are all four regression assumptions satisfied?

E. Redo the regression after normalizing all three variables. ( find the Zscores then run Zy on the Zscores of the X variables.)

EXCEL DATA:

File Home Insert Draw Page Layout Formulas Data Review View Help Calibri 71 = E B I U A A Paste A Clipboard Font Alignment E4 X V A B C D E F G H Income Household Amount ($1000s) Size Charged (S) 54 3 4,016 30 3,159 32 5,100 50 5 4,742 6 31 2 1,864 55 2 4,070 2,731 3,348 10 4,764 11 4,110 12 4,208 13 4,219 14 2,477 15 2,514 16 4,214 17 NOAWN 4.965 18 4,412 19 2,448 20 2,995 21 4,171 22 5,678 23 3,623 24 55 5,301 25 42 3,020 26 4.828 27 5,573 28 30 2,583 29 3,866 30 34 3,586 31 67 5,037 32 50 3,605 33 67 5,345 Problems Consumer Data (+Review View Help Formulas Data Home Insert Draw Page Layout File = Calibri 11 B I U v A A = = Paste A Alignment Clipboard Font X V f E4 C D E F G H A B 27 54 5,573 30 1 2,583 28 48 3,866 29 2 3,586 30 34 5 31 5,037 32 50 3.605 33 67 5,345 WNOUN+ 34 55 5,370 35 52 3,890 4,705 36 62 37 64 4,157 38 3,579 39 3,890 40 WANAWN 2,972 3,121 41 42 39 4,183 43 54 3,730 44 23 4,127 2,921 45 27 4,603 46 26 47 61 4,273 48 30 3,067 49 22 3,074 4,820 50 46 51 66 5,149 52 53 54 55 56 57 58 59 60 61 62 Problems Consumer Data +