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.
