Regression Output


This continues the coffee shop example. Here we introduce a dummy variable called SA, which takes the value 1 if the shop is in SA and 0 otherwise. Here is EXCEL regression output to model the revenue of the coffee shops (See the question file)

a) Write out the equations separately for each value of the dummy variable.

b) Sketch the 2 equations above.

c) Interpret the slope on the dummy variable.

d) Test the significance of the coefficient on the dummy variable against a 2 tailed alternative.

e) There is another variable in the dataset for the number of sittings. This takes the value 2 if the shop is open for breakfast and lunch and 1 if the shop is open for lunch only. Is this a dummy variable? Explain your answer.


An industrial psychologist wishes to study the effects of motivation on sales in a particular firm. Of 24 new sales persons being trained, 12 are to be paid at an hourly rate and 12 on a commission basis. The 24 individuals were randomly assigned to two groups. The following data represents the sale volume achieved during the first month on the job. Is there evidence that wage incentives (through commission) Yield greater average sales volume? Use a 5% level of significance. Hourly Rate 256 239 222 207 228 241 212 216 236 219 225 230 Commission 224 254 273 285 237 277 261 228 234 225 232 245     

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