Question 10:

Beer sales at the Shapiro One-Stop Store are analyzed using temperature
and number of people (age 21 or over) on the street as independent variables.

a) The correlations matrix show that the daily temperature and the daily traffic
count have a high positive relationship (0.827 and 0.822) with the dependent
variable, the number of six-packs of beer sold each day. It also show the
moderately positive relationship (0.68) between the daily high temperature and
the daily traffic count.
b) Apply t test we have:
For X1:
t = β1/SEβ1 = 0.78207/0.22694 = 3.446
For X2:
t = β2/SEβ2 = 0.06795/0.02026 = 3.3539
According to the p-value table we have:
For X1, the p-value is:

p-value = 0.0031
For X2, the p-value is:

p-value = 0.0038
We can see that;
X1 and X2 have p-value smaller than the significant level (<0.01). So, reject H0.
c) The forecast is:
Ŷ = -26.7 + 0.782*60 + 0.068*500 = 54.22 six-packs of beer.
d) R2 = SSR/SST = 11589.035/14316.949 = 80.95%
So the regression equation explains 80.95% of the variation in the number of
six-packs of beer sold each day
e) The standard error of the estimate:
Sy.x’s = SQRT(MSE) = SQRT(160.466) = 12.67
f) The correlation between the X1 and X2 is moderate, the
multicollinearity affects the model accuracy. From the slope hypothesis t-test
in part (b) we can say that both X1 and X2 significantly contribute to the
regression model.