Question

To be done on excel: 

Team	Revenue ($ millions)	Value ($ millions)
Arizona Diamondbacks	195	584
Atlanta Braves	225	629
Baltimore Orioles	206	618
Boston Red Sox	336	1,312
Chicago Cubs	274	1,000
Chicago White Sox	216	692
Cincinnati Reds	202	546
Cleveland Indians	186	559
Colorado Rockies	199	537
Detroit Tigers	238	643
Houston Astros	196	626
Kansas City Royals	169	457
Los Angeles Angels of Anaheim	239	718
Los Angeles Dodgers	245	1,615
Miami Marlins	195	520
Milwaukee Brewers	201	562
Minnesota Twins	214	578
New York Mets	232	811
New York Yankees	471	2,300
Oakland Athletics	173	468
Philadelphia Phillies	279	893
Pittsburgh Pirates	178	479
San Diego Padres	189	600
San Francisco Giants	262	786
Seattle Mariners	215	644
St Louis Cardinals	239	716
Tampa Bay Rays	167	451
Texas Rangers	239	764
Toronto Blue Jays	203	568
Washington Nationals	225	631

a) Calculate descriptive statistics for the variables revenue and value.

b) Use a “PivotChart” to produce a frequency distribution (table) and histogram for team values using bins (intervals) of 200.

c) Use OLS to estimate the linear relationship between revenue (x) and value (y).

d) Interpret the estimated slope coefficient. Can you conclude that the estimated coefficient is statistically different from zero? How do you know this? Can you conclude that the estimated coefficient is statistically different from 7? How do you know this?

e) Interpret the regression model’s R-squared.

f) Graph a scatter plot of the relationship between team revenue and value and be sure to include the estimated linear regression equation in your graph.

g) Write the estimated regression equation. Use your estimated regression equation to predict the value of a MLB team with revenue of 300. Use your estimated regression equation to predict the value of a MLB with revenue of 20. Do you have concerns about either of your predictions, why or why not?

h) Calculate a prediction interval for the two predictions you made in part g).

i) Graph a scatter plot of the residuals against the predicted values. Does the graph suggest there are any concerns about the assumption of the error term having constant variance?

j) Use the standardized residuals from the regression model to determine if there are any influential observations.

k) Re-estimate the regression model excluding the New York Yankees and Los Angeles Dodgers. Do your results seem much different?

Answer 1