Case: Dr. Jung’s Diamonds Selection With Christmas coming, Dr. Jung became interested in buying diamonds for his wife. After perusing the Web, he learned about the “4Cs” of diamonds: cut, color, clarity, and carat. He knew his wife wanted round-cut earrings mounted in white gold settings, so he immediately narrowed his focus to evaluating color, clarity, and carat for that style earring. After a bit of searching, Dr. Jung located a number of earring sets that he would consider purchasing. But he knew the pricing of diamonds varied considerably. To assist in his decision making, Dr. Jung decided to use regression analysis to develop a model to predict the retail price of different sets of round-cut earrings based on their color, clarity, and carat scores. He assembled the data in the file

Question
Scatterplots
asked 2020-12-25
Case: Dr. Jung’s Diamonds Selection
With Christmas coming, Dr. Jung became interested in buying diamonds for his wife. After perusing the Web, he learned about the “4Cs” of diamonds: cut, color, clarity, and carat. He knew his wife wanted round-cut earrings mounted in white gold settings, so he immediately narrowed his focus to evaluating color, clarity, and carat for that style earring.
After a bit of searching, Dr. Jung located a number of earring sets that he would consider purchasing. But he knew the pricing of diamonds varied considerably. To assist in his decision making, Dr. Jung decided to use regression analysis to develop a model to predict the retail price of different sets of round-cut earrings based on their color, clarity, and carat scores. He assembled the data in the file Diamonds.xls for this purpose. Use this data to answer the following questions for Dr. Jung.
1) Prepare scatter plots showing the relationship between the earring prices (Y) and each of the potential independent variables. What sort of relationship does each plot suggest?
2) Let X1, X2, and X3 represent diamond color, clarity, and carats, respectively. If Dr. Jung wanted to build a linear regression model to estimate earring prices using these variables, which variables would you recommend that he use? Why?
3) Suppose Dr. Jung decides to use clarity (X2) and carats (X3) as independent variables in a regression model to predict earring prices. What is the estimated regression equation? What is the value of the R2 and adjusted-R2 statistics?
4) Use the regression equation identified in the previous question to create estimated prices for each of the earring sets in Dr. Jung’s sample. Which sets of earrings appear to be overpriced and which appear to be bargains? Based on this analysis, which set of earrings would you suggest that Dr. Jung purchase?
5) Dr. Jung now remembers that it sometimes helps to perform a square root transformation on the dependent variable in a regression problem. Modify your spreadsheet to include a new dependent variable that is the square root on the earring prices (use Excel’s SQRT( ) function). If Dr. Jung wanted to build a linear regression model to estimate the square root of earring prices using the same independent variables as before, which variables would you recommend that he use? Why?
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6) Suppose Dr. Jung decides to use clarity (X2) and carats (X3) as independent variables in a regression model to predict the square root of the earring prices. What is the estimated regression equation? What is the value of the R2 and adjusted-R2 statistics?
7) Use the regression equation identified in the previous question to create estimated prices for each of the earring sets in Dr. Jung’s sample. (Remember, your model estimates the square root of the earring prices. So you must actually square the model’s estimates to convert them to price estimates.) Which sets of earring appears to be overpriced and which appear to be bargains? Based on this analysis, which set of earrings would you suggest that Dr. Jung purchase?
8) Dr. Jung now also remembers that it sometimes helps to include interaction terms in a regression model—where you create a new independent variable as the product of two of the original variables. Modify your spreadsheet to include three new independent variables, X4, X5, and X6, representing interaction terms where: X4 = X1 × X2, X5 = X1 × X3, and X6 = X2 × X3. There are now six potential independent variables. If Dr. Jung wanted to build a linear regression model to estimate the square root of earring prices using the same independent variables as before, which variables would you recommend that he use? Why?
9) Suppose Dr. Jung decides to use color (X1), carats (X3) and the interaction terms X4 (color * clarity) and X5 (color * carats) as independent variables in a regression model to predict the square root of the earring prices. What is the estimated regression equation? What is the value of the R2 and adjusted-R2 statistics?
10) Use the regression equation identified in the previous question to create estimated prices for each of the earring sets in Dr. Jung’s sample. (Remember, your model estimates the square root of the earring prices. So you must square the model’s estimates to convert them to actual price estimates.) Which sets of earrings appear to be overpriced and which appear to be bargains? Based on this analysis, which set of earrings would you suggest that Dr. Jung purchase?

Answers (1)

2020-12-26
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Relevant Questions

asked 2020-10-23
The table below shows the number of people for three different race groups who were shot by police that were either armed or unarmed. These values are very close to the exact numbers. They have been changed slightly for each student to get a unique problem.
Suspect was Armed:
Black - 543
White - 1176
Hispanic - 378
Total - 2097
Suspect was unarmed:
Black - 60
White - 67
Hispanic - 38
Total - 165
Total:
Black - 603
White - 1243
Hispanic - 416
Total - 2262
Give your answer as a decimal to at least three decimal places.
a) What percent are Black?
b) What percent are Unarmed?
c) In order for two variables to be Independent of each other, the P \((A and B) = P(A) \cdot P(B) P(A and B) = P(A) \cdot P(B).\)
This just means that the percentage of times that both things happen equals the individual percentages multiplied together (Only if they are Independent of each other).
Therefore, if a person's race is independent of whether they were killed being unarmed then the percentage of black people that are killed while being unarmed should equal the percentage of blacks times the percentage of Unarmed. Let's check this. Multiply your answer to part a (percentage of blacks) by your answer to part b (percentage of unarmed).
Remember, the previous answer is only correct if the variables are Independent.
d) Now let's get the real percent that are Black and Unarmed by using the table?
If answer c is "significantly different" than answer d, then that means that there could be a different percentage of unarmed people being shot based on race. We will check this out later in the course.
Let's compare the percentage of unarmed shot for each race.
e) What percent are White and Unarmed?
f) What percent are Hispanic and Unarmed?
If you compare answers d, e and f it shows the highest percentage of unarmed people being shot is most likely white.
Why is that?
This is because there are more white people in the United States than any other race and therefore there are likely to be more white people in the table. Since there are more white people in the table, there most likely would be more white and unarmed people shot by police than any other race. This pulls the percentage of white and unarmed up. In addition, there most likely would be more white and armed shot by police. All the percentages for white people would be higher, because there are more white people. For example, the table contains very few Hispanic people, and the percentage of people in the table that were Hispanic and unarmed is the lowest percentage.
Think of it this way. If you went to a college that was 90% female and 10% male, then females would most likely have the highest percentage of A grades. They would also most likely have the highest percentage of B, C, D and F grades
The correct way to compare is "conditional probability". Conditional probability is getting the probability of something happening, given we are dealing with just the people in a particular group.
g) What percent of blacks shot and killed by police were unarmed?
h) What percent of whites shot and killed by police were unarmed?
i) What percent of Hispanics shot and killed by police were unarmed?
You can see by the answers to part g and h, that the percentage of blacks that were unarmed and killed by police is approximately twice that of whites that were unarmed and killed by police.
j) Why do you believe this is happening?
Do a search on the internet for reasons why blacks are more likely to be killed by police. Read a few articles on the topic. Write your response using the articles as references. Give the websites used in your response. Your answer should be several sentences long with at least one website listed. This part of this problem will be graded after the due date.
asked 2021-01-17
A new thermostat has been engineered for the frozen food cases in large supermarkets. Both the old and new thermostats hold temperatures at an average of \(25^{\circ}F\). However, it is hoped that the new thermostat might be more dependable in the sense that it will hold temperatures closer to \(25^{\circ}F\). One frozen food case was equipped with the new thermostat, and a random sample of 21 temperature readings gave a sample variance of 5.1. Another similar frozen food case was equipped with the old thermostat, and a random sample of 19 temperature readings gave a sample variance of 12.8. Test the claim that the population variance of the old thermostat temperature readings is larger than that for the new thermostat. Use a \(5\%\) level of significance. How could your test conclusion relate to the question regarding the dependability of the temperature readings? (Let population 1 refer to data from the old thermostat.)
(a) What is the level of significance?
State the null and alternate hypotheses.
\(H0:?_{1}^{2}=?_{2}^{2},H1:?_{1}^{2}>?_{2}^{2}H0:?_{1}^{2}=?_{2}^{2},H1:?_{1}^{2}\neq?_{2}^{2}H0:?_{1}^{2}=?_{2}^{2},H1:?_{1}^{2}?_{2}^{2},H1:?_{1}^{2}=?_{2}^{2}\)
(b) Find the value of the sample F statistic. (Round your answer to two decimal places.)
What are the degrees of freedom?
\(df_{N} = ?\)
\(df_{D} = ?\)
What assumptions are you making about the original distribution?
The populations follow independent normal distributions. We have random samples from each population.The populations follow dependent normal distributions. We have random samples from each population.The populations follow independent normal distributions.The populations follow independent chi-square distributions. We have random samples from each population.
(c) Find or estimate the P-value of the sample test statistic. (Round your answer to four decimal places.)
(d) Based on your answers in parts (a) to (c), will you reject or fail to reject the null hypothesis?
At the ? = 0.05 level, we fail to reject the null hypothesis and conclude the data are not statistically significant.At the ? = 0.05 level, we fail to reject the null hypothesis and conclude the data are statistically significant. At the ? = 0.05 level, we reject the null hypothesis and conclude the data are not statistically significant.At the ? = 0.05 level, we reject the null hypothesis and conclude the data are statistically significant.
(e) Interpret your conclusion in the context of the application.
Reject the null hypothesis, there is sufficient evidence that the population variance is larger in the old thermostat temperature readings.Fail to reject the null hypothesis, there is sufficient evidence that the population variance is larger in the old thermostat temperature readings. Fail to reject the null hypothesis, there is insufficient evidence that the population variance is larger in the old thermostat temperature readings.Reject the null hypothesis, there is insufficient evidence that the population variance is larger in the old thermostat temperature readings.
asked 2021-02-09
A two-sample inference deals with dependent and independent inferences. In a two-sample hypothesis testing problem, underlying parameters of two different populations are compared. In a longitudinal (or follow-up) study, the same group of people is followed over time. Two samples are said to be paired when each data point in the first sample is matched and related to a unique data point in the second sample.
This problem demonstrates inference from two dependent (follow-up) samples using the data from the hypothetical study of new cases of tuberculosis (TB) before and after the vaccination was done in several geographical areas in a country in sub-Saharan Africa. Conclusion about the null hypothesis is to note the difference between samples.
The problem that demonstrates inference from two dependent samples uses hypothetical data from the TB vaccinations and the number of new cases before and after vaccination. PSK\begin{array}{|c|c|} \hline Geographical\ regions & Before\ vaccination & After\ vaccination\\ \hline 1 & 85 & 11\\ \hline 2 & 77 & 5\\ \hline 3 & 110 & 14\\ \hline 4 & 65 & 12\\ \hline 5 & 81 & 10\\\hline 6 & 70 & 7\\ \hline 7 & 74 & 8\\ \hline 8 & 84 & 11\\ \hline 9 & 90 & 9\\ \hline 10 & 95 & 8\\ \hline \end{array}ZSK
Using the Minitab statistical analysis program to enter the data and perform the analysis, complete the following: Construct a one-sided \(\displaystyle{95}\%\) confidence interval for the true difference in population means. Test the null hypothesis that the population means are identical at the 0.05 level of significance.
asked 2021-02-11
Several models have been proposed to explain the diversification of life during geological periods. According to Benton (1997), The diversification of marine families in the past 600 million years (Myr) appears to have followed two or three logistic curves, with equilibrium levels that lasted for up to 200 Myr. In contrast, continental organisms clearly show an exponential pattern of diversification, and although it is not clear whether the empirical diversification patterns are real or are artifacts of a poor fossil record, the latter explanation seems unlikely. In this problem, we will investigate three models fordiversification. They are analogous to models for populationgrowth, however, the quantities involved have a differentinterpretation. We denote by N(t) the diversification function,which counts the number of taxa as a function of time, and by rthe intrinsic rate of diversification.
(a) (Exponential Model) This model is described by \(\displaystyle{\frac{{{d}{N}}}{{{\left.{d}{t}\right.}}}}={r}_{{{e}}}{N}\ {\left({8.86}\right)}.\) Solve (8.86) with the initial condition N(0) at time 0, and show that \(\displaystyle{r}_{{{e}}}\) can be estimated from \(\displaystyle{r}_{{{e}}}={\frac{{{1}}}{{{t}}}}\ {\ln{\ }}{\left[{\frac{{{N}{\left({t}\right)}}}{{{N}{\left({0}\right)}}}}\right]}\ {\left({8.87}\right)}\)
(b) (Logistic Growth) This model is described by \(\displaystyle{\frac{{{d}{N}}}{{{\left.{d}{t}\right.}}}}={r}_{{{l}}}{N}\ {\left({1}\ -\ {\frac{{{N}}}{{{K}}}}\right)}\ {\left({8.88}\right)}\) where K is the equilibrium value. Solve (8.88) with the initial condition N(0) at time 0, and show that \(\displaystyle{r}_{{{l}}}\) can be estimated from \(\displaystyle{r}_{{{l}}}={\frac{{{1}}}{{{t}}}}\ {\ln{\ }}{\left[{\frac{{{K}\ -\ {N}{\left({0}\right)}}}{{{N}{\left({0}\right)}}}}\right]}\ +\ {\frac{{{1}}}{{{t}}}}\ {\ln{\ }}{\left[{\frac{{{N}{\left({t}\right)}}}{{{K}\ -\ {N}{\left({t}\right)}}}}\right]}\ {\left({8.89}\right)}\) for \(\displaystyle{N}{\left({t}\right)}\ {<}\ {K}.\)
(c) Assume that \(\displaystyle{N}{\left({0}\right)}={1}\) and \(\displaystyle{N}{\left({10}\right)}={1000}.\) Estimate \(\displaystyle{r}_{{{e}}}\) and \(\displaystyle{r}_{{{l}}}\) for both \(\displaystyle{K}={1001}\) and \(\displaystyle{K}={10000}.\)
(d) Use your answer in (c) to explain the following quote from Stanley (1979): There must be a general tendency for calculated values of \(\displaystyle{\left[{r}\right]}\) to represent underestimates of exponential rates,because some radiation will have followed distinctly sigmoid paths during the interval evaluated.
(e) Explain why the exponential model is a good approximation to the logistic model when \(\displaystyle\frac{{N}}{{K}}\) is small compared with 1.
asked 2020-12-25
In this exercise, you will use the correlation and regression applet to create scatter plots with 10 points that have a correlation close to 0.7. The lesson here is that many models may have the same correlation. Always compile your data before trusting correlations. (a) Stop after adding the first two points. What is the value of correlation?
(Enter your answer, rounded to four decimal places).
r=?
Why does correlation matter? Two is the minimum number of data points required to calculate the correlation. This value is the default correlation.
Because two points define a line, correlation always matters.
The mean of these two values always has this value.
asked 2020-10-23
1. Find each of the requested values for a population with a mean of \(? = 40\), and a standard deviation of \(? = 8\) A. What is the z-score corresponding to \(X = 52?\) B. What is the X value corresponding to \(z = - 0.50?\) C. If all of the scores in the population are transformed into z-scores, what will be the values for the mean and standard deviation for the complete set of z-scores? D. What is the z-score corresponding to a sample mean of \(M=42\) for a sample of \(n = 4\) scores? E. What is the z-scores corresponding to a sample mean of \(M= 42\) for a sample of \(n = 6\) scores? 2. True or false: a. All normal distributions are symmetrical b. All normal distributions have a mean of 1.0 c. All normal distributions have a standard deviation of 1.0 d. The total area under the curve of all normal distributions is equal to 1 3. Interpret the location, direction, and distance (near or far) of the following zscores: \(a. -2.00 b. 1.25 c. 3.50 d. -0.34\) 4. You are part of a trivia team and have tracked your team’s performance since you started playing, so you know that your scores are normally distributed with \(\mu = 78\) and \(\sigma = 12\). Recently, a new person joined the team, and you think the scores have gotten better. Use hypothesis testing to see if the average score has improved based on the following 8 weeks’ worth of score data: \(82, 74, 62, 68, 79, 94, 90, 81, 80\). 5. You get hired as a server at a local restaurant, and the manager tells you that servers’ tips are $42 on average but vary about \($12 (\mu = 42, \sigma = 12)\). You decide to track your tips to see if you make a different amount, but because this is your first job as a server, you don’t know if you will make more or less in tips. After working 16 shifts, you find that your average nightly amount is $44.50 from tips. Test for a difference between this value and the population mean at the \(\alpha = 0.05\) level of significance.
asked 2020-12-28
Is statistical inference intuitive to babies? In other words, are babies able to generalize from sample to population? In this study,1 8-month-old infants watched someone draw a sample of five balls from an opaque box. Each sample consisted of four balls of one color (red or white) and one ball of the other color. After observing the sample, the side of the box was lifted so the infants could see all of the balls inside (the population). Some boxes had an “expected” population, with balls in the same color proportions as the sample, while other boxes had an “unexpected” population, with balls in the opposite color proportion from the sample. Babies looked at the unexpected populations for an average of 9.9 seconds (sd = 4.5 seconds) and the expected populations for an average of 7.5 seconds (sd = 4.2 seconds). The sample size in each group was 20, and you may assume the data in each group are reasonably normally distributed. Is this convincing evidence that babies look longer at the unexpected population, suggesting that they make inferences about the population from the sample? Let group 1 and group 2 be the time spent looking at the unexpected and expected populations, respectively. A) Calculate the relevant sample statistic. Enter the exact answer. Sample statistic: _____ B) Calculate the t-statistic. Round your answer to two decimal places. t-statistic = ___________ C) Find the p-value. Round your answer to three decimal places. p-value =
asked 2021-03-02
Consider a capital budgeting problem with six projects represented by \(0-1\ \text{variables}\ x1,\ x2,\ x3,\ x4,\ x5,\ \text{and}\ x6.\)
a. Write a constraint modeling a situation in which two of the projects 1, 3, and 6 must be undertaken.
b. In which situation the constraint "\(x3\ -\ x5 = 0\)" is used, explain clearly:
c. Write a constraint modeling a situation in which roject 2 or 4 must be undertaken, but not both.
d. Write constraints modeling a situation where project 1 cannot be undertaken IF projects 3. also is NOT undertaken.
e. Explain clearly the situation in which the following 3 constraints are used simulataneously (together):
\(\displaystyle{x}{4}\le{x}{1}\)
\(\displaystyle{x}{4}\le{x}{3}\)
\(\displaystyle{x}{4}\ge{x}{1}+{x}{3}-{1}\)
asked 2020-11-08
Testing for a Linear Correlation. In Exercises 13–28, construct a scatterplot, and find the value of the linear correlation coefficient r. Also find the P-value or the critical values of r from Table A-6. Use a significance level of \(\alpha = 0.05\). Determine whether there is sufficient evidence to support a claim of a linear correlation between the two variables. (Save your work because the same data sets will be used in Section 10-2 exercises.) Lemons and Car Crashes Listed below are annual data for various years. The data are weights (metric tons) of lemons imported from Mexico and U.S. car crash fatality rates per 100,000 population [based on data from “The Trouble with QSAR (or How I Learned to Stop Worrying and Embrace Fallacy),” by Stephen Johnson, Journal of Chemical Information and Modeling, Vol. 48, No. 1]. Is there sufficient evidence to conclude that there is a linear correlation between weights of lemon imports from Mexico and U.S. car fatality rates? Do the results suggest that imported lemons cause car fatalities? \(\begin{matrix} \text{Lemon Imports} & 230 & 265 & 358 & 480 & 530\\ \text{Crashe Fatality Rate} & 15.9 & 15.7 & 15.4 & 15.3 & 14.9\\ \end{matrix}\)
asked 2021-02-25
Give a full and correct answer Why is it important that a sample be random and representative when conducting hypothesis testing? Representative Sample vs. Random Sample: An Overview Economists and researchers seek to reduce sampling bias to near negligible levels when employing statistical analysis. Three basic characteristics in a sample reduce the chances of sampling bias and allow economists to make more confident inferences about a general population from the results obtained from the sample analysis or study: * Such samples must be representative of the chosen population studied. * They must be randomly chosen, meaning that each member of the larger population has an equal chance of being chosen. * They must be large enough so as not to skew the results. The optimal size of the sample group depends on the precise degree of confidence required for making an inference. Representative sampling and random sampling are two techniques used to help ensure data is free of bias. These sampling techniques are not mutually exclusive and, in fact, they are often used in tandem to reduce the degree of sampling error in an analysis and allow for greater confidence in making statistical inferences from the sample in regard to the larger group. Representative Sample A representative sample is a group or set chosen from a larger statistical population or group of factors or instances that adequately replicates the larger group according to whatever characteristic or quality is under study. A representative sample parallels key variables and characteristics of the large society under examination. Some examples include sex, age, education level, socioeconomic status (SES), or marital status. A larger sample size reduced sampling error and increases the likelihood that the sample accurately reflects the target population. Random Sample A random sample is a group or set chosen from a larger population or group of factors of instances in a random manner that allows for each member of the larger group to have an equal chance of being chosen. A random sample is meant to be an unbiased representation of the larger population. It is considered a fair way to select a sample from a larger population since every member of the population has an equal chance of getting selected. Special Considerations: People collecting samples need to ensure that bias is minimized. Representative sampling is one of the key methods of achieving this because such samples replicate as closely as possible elements of the larger population under study. This alone, however, is not enough to make the sampling bias negligible. Combining the random sampling technique with the representative sampling method reduces bias further because no specific member of the representative population has a greater chance of selection into the sample than any other. Summarize this article in 250 words.
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