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A motion picture industry analyst is studying m ies based on epic novels. The following data were obtained for 10 Hollywood movies made in the past five years. Each movie was based on an epic novel. For these data, x, = first-year b e receipts of the movie, x, = total production costs of the movie, x3 = total promotional costs of the movie, and x = total book sales prior to movie release. All units are in millions of dollars 85.1 8.5 4.7 106.3 12.9 5.8 8.8 50.2 2.1 15.1 130.6 10.7 8.4 12.2 54.8 3.1 2.9 10.6 30.3 3.5 3.5 9 .2 3.7 9.7 9.0 7.6 135.4 15.1 7.7 20 .8 89.3 10.2 79 (a) Generate summary statistics, including the mean and standard deviation of each variable. Compute the coefficient of variation for each variable. (Use 2 decimal places.) CV X2 Relative to its mean, which variable has the largest spread of data values? Ox O X 3 O X 1 X4 Why would a variable with a large coefficient of variation be expected to change a lot relative to its average value? Although x, has the largest standard deviation, it has the smallest coefficient of variation. How does the mean of x, help explain this? A variable with a large CV has large s relative to x. Here, x, has a small CV because we divide by a large mean. O A variable with a large CV has large s relative to x. Here, x, has a small CV because we divide by a small mean. A variable with a large CV has small s relative to x. Here, x, has a small CV because we divide by a small mean. O A variable with a large CV has small s relative to x. Here, x, has a small CV because we divide by a large mean. (b) For each pair of variables, generate the correlation coefficient r. Compute the corresponding coefficient of determination . (Use 3 decimal places.) X1 1X2 X1, X3 X1 1 X4 X21X3 X21 X4 *31 X 4 Which of the three variables X21 X3, and x4 has the least influence on box office receipts? O x2 O X3 OXA What percent of the variation in box office receipts can be attributed to the corresponding variation in production costs? (Use 1 decimal place.) % (c) Perform a regression analysis with x, as the response variable. Use X2, X3, and x4 as explanatory variables. Look at the coefficient of multiple determination. What percentage of the variation in x, can be explained by the corresponding variations in X2, X3, and x4 taken together? (Use 1 decimal place.) % d) Write out the regression equation. (Use 2 decimal places.) X1 = x2+ Explain how each coefficient can be thought of as a slope. If we look at all coefficients together, each one can be thought of as a "slope." If we look at all coefficients together, the sum of them can be thought of as the overall "slope" of the regression line. If we hold all other explanatory variables as fixed constants, then we can look at one coefficient as a "slope." If we hold all explanatory variables as fixed constants, the intercept can be thought of as a "slope." If X2 (production costs) and X4 (book sales) were held fixed but X3 (promotional costs) were increased by 0.6 million dollars, what would you expect for the corresponding change in x1 (box office receipts)? (Use 2 decimal places.) (e) Test each coefficient in the regression equation to determine if it is zero or not zero. Use level of significance 5%. (Use 2 decimal places for t and 3 decimal places for the P- value.) P-value P2 B3 Conclusion Reject the null for B3 and B4. Fail to reject the null for B 2. O Reject the null for B2 and B4. Fail to reject the null for B 3. Reject the null for all tests. Reject the null for B2 and B3. Fail to reject the null for B 4. Explain why book sales x4 probably are not contributing much information in the regression model to forecast box office receipts x 1. O From the previous tests, we can conclude that the coefficient for x4 is not different than 0. Thus it belongs in the model. From the previous tests, we can conclude that the coefficient for x4 is different than 0. Thus it does not belong in the model. From the previous tests, we can conclude that the coefficient for x4 is different than 0. Thus it belongs in the model. From the previous tests, we can conclude that the coefficient for x4 is not different than 0. Thus it does not belong in the model. (f) Find a 90% confidence interval for each coefficient. (Use 2 decimal places.) lower limit upper limit P 2 B3 (9) Suppose a new movie (based on an epic novel) has just been released. Production costs were X2 = 11.4 million; promotion costs were x3 = 4.7 million; book sales were x4 = 8.1 million. Make a prediction for x, = first-year box office receipts and find an 85% confidence interval for your prediction (if your software supports prediction intervals). (Use 1 decimal place.) prediction lower limit upper limit (h) Construct a new regression model with x; as the response variable and X,, X2, and x4 as explanatory variables. (Use 2 decimal places.) X3= x 1 + x 2+ X4 Suppose Hollywood is planning a new epic movie with projected box office sales x, = 100 million and production costs X2 = 12 million. The book on which the movie is based had sales of X4 = 9.2 million. Forecast the dollar amount (in millions) that should be budgeted for promotion costs x; and find an 80% confidence interval for your prediction. prediction lower limit upper limit Need Help? Read It
