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.

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