Consumer Research, Inc

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Consumer Research, Inc., is an independent agency that conducts research on consumer attitudes and behaviors for a variety of firms. In one study, a client asked for an investigation of consumer characteristics that can be used to predict the amount charged by credit card users in Table 5. Data were collected on annual income, household size, and annual credit card charges for a sample of 50 consumers.

1. Provide descriptive statistics of the data, develop a multiple regression model that can be used to predict the Amount Charged given the Annual Income and Household Size, state the hypotheses on the coefficients, justify formulation of these hypotheses, and interpret the results. Use ? = .05. Include all phases of assessment of the model and do not forget to check multicollinearity.

2. To assess robustness of the software, repeat part (a) but this time use full representation of Annual Income. What conclusions can you make?

3. Choose a combination of Annual Income and Household Size not given in the table and find the expected Amount Charged for this combination. Show work for this one. Just make up the value for income and household size and for those values calculate amount charged using the equation derived in the first part of assignment.

Use ? = .05 in testing all hypotheses

 

Table 5

Data on Annual Income, Household size, Amount of Credit Changed

Income ($1000’s) Household size Amount charged ($) Income Size Charged 54 3 4016 54 6 5573 30 2 3159 30 1 2583 32 4 5100 48 2 3866 50 5 4742 34 5 3586 31 2 1864 67 4 5037 55 2 4070 50 2 3605 37 1 2731 67 5 5345 40 2 3348 55 6 5370 66 4 4764 52 2 3890 51 3 4110 62 3 4705 25 3 4208 64 2 4157 48 4 4219 22 3 3579 27 1 2477 29 4 3890 33 2 2514 39 2 2972 65 3 4214 35 1 3121 63 4 4965 39 4 4183 42 6 4412 54 3 3730 21 2 2448 23 6 4127 44 1 2995 27 2 2921 37 5 4171 26 7 4603 62 6 5678 61 2 4273 21 3 3623 30 2 3067 55 7 5301 22 4 3074 42 2 3020 46 5 4820 41 7 4828 66 4 5149

 

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