# Activity4.docx

Activity I – Your firm is interested in learning more about how its salaries relate to its employees’ tenure with the firm. It has collected the following data for 25 of its employees.

 EMPLOYEE NUMBER TENURE (YEARS) SALARY (\$) 1 15 53,908 2 32 78,230 3 14 55,164 4 20 57,647 5 25 63,111 6 14 54,991 7 28 74,571 8 30 73,189 9 28 71,859 10 17 55,978 11 14 61,676 12 6 44,865 13 21 64,676 14 11 59,101 15 14 58,441 16 32 81,964 17 29 76,373 18 33 82,860 19 27 70,019 20 16 58,474 21 26 80,074 22 3 45,594 23 14 63,676 24 9 68,444 25 14 70,306

Plot these data points and describe using regression how salary relates to firm tenure for this group.

Activity II – The data attached contains information on customers’ ratings of your product (CustRate), on a scale of 1 to 100, along with demographic information. The demographic information includes: income (Inc), age (Age), education (Educ), and marital status (Marr). The last variable equals one if the respondent is married and zero otherwise. Assume the data-generating process can be written as:

CustRate i=α+β1Inc i+β2Age i+β3Educ i+β4Marr i+U i.

a. Test the hypothesis that income has no impact on customer rating, using a confidence level of 95%. Be sure to provide the reasoning behind your result.

b. Test the hypothesis that β2=0.05, using a confidence level of 90%. Be sure to provide the reasoning behind your result.

c. Build a 95% confidence interval for the impact of education on customer rating. Be sure to provide the reasoning for your result.

d. Build a 95% confidence interval for the impact of being married on customer rating. Be sure to provide the reasoning for your result.

e. Predict the change in customer rating if a customer’s income increases by \$10,000, with no change in age, education, or marital status.