Question

For 26 companies operating in several technology industries, the accompanying data gives the expenses on research and development (R&D) and the total assets of the companies. Both values are reported in millions of dollars. Complete parts a through e below. Click the icon to view the data table. (a) Scatterplot R&D Expense on Assets. Does a line seem to you to be a good summary of the relationship between these two variables? Construct the scatterplot. Choose the correct graph below. Α. 0 1,000 10,000- 10.00 1.000 R&D (5000,000) R&D (5000,000) R&D ($000,000) R&D ($000,000) 0 OK 10,000 Assets ($000,000) 1.000 Assets ($000,000) 1,000 Assets ($000,000) OVAT 0 10,000 Assets ($000,000) Does a line seem to you to be a good summary of the association between these variables? A. Yes, because the scatterplot shows an approximate linear pattern, assuming that the two outliers are acceptable. B. Yes, because the scatterplot does not show any obvious pattern. OC. No, because the scatterplot shows an obvious curved line OD. No, because the scatterplot does not show any obvious pattern.

Assets R&D_Expense

2,198.673 200.083

3,870.615 418.398

1,494.774 138.476

711.152 71.067

1,569.469 135.273

2,832.213 245.403

2,183.012 195.474

461.679 45.484

803.496 84.213

3,776.297 372.948

3,965.887 332.381

927.246 85.546

2,176.368 195.359

7,533.595 653.399

1,336.162 132.614

2,274.862 236.087

289.846 32.028

2,544.071 270.175

638.382 58.371

9,605.452 975.159

667.469 74.888

1,702.442 156.826

183.616 22.811

1,572.785 163.298

581.639 64.847

3,444.067 320.042

Answer 1

a)

R&D ($000,000) 10,000 Assets (5000,000)

A. Yes, because the scatterplot shows an approximate linear pattern, assuming that the two outliers are acceptable.

b)

excel o/p on regression-

Regression Statistics
Multiple R	0.9930
R Square	0.9861
Adjusted R Square	0.9856
Standard Error	25.3354
Observations	26
ANOVA
	df	SS	MS	F	Significance F
Regression	1	1096345.8	1096345.8	1708.02	0.0000
Residual	24	15405.2	641.8822
Total	25	1111751.0
	Coefficients	Standard Error	t Stat	P-value	lower 95%	upper 95%
Intercept	0.124	7.253	0.017	0.9865	-14.8454	15.093
X	0.096	0.002	41.328	0.0000	0.0909	0.1004

Ŷ =   0.124   +   0.096   *x

intercept interpreatation = 0.124 million dollars

OC. The intercept of million dollars is the amount of money that a company with no assets would spend on R&D.

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slope interpretation =0.096 R&D dollars per assest dollar , increases by 0.096

O A. The slope is increases by R&D dollars per asset dollar. For every one dollar increase in assets, average spending on R&D dollars.

c)

R² =    0.986 no units

Se=25.335 units of million dollars

OC. The value of means that the equation describes about % of the variation. The value of s, means that the standard deviation of the residuals is million dollars. However, the large outliers increase the size of 2.

answer: 98.6% , 25.3 million dollars