# The Variable X is the World Price

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## The Variable X is the World Price

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PART V: PROBLEMSET:PROBLEM(1):(10 points)(1)This is asimple regression problem. You areadata analyst with the U.S. Department of Commerce.You havegathered information from thedepartment’s data warehouseon the world priceof pulp and theexports ofpulp to the rest of the world. You havebeen asked to seewhat would be the effect ofa\$1 increasein thepriceof pulp on shipments from theUnited States. Assumethe United States produces100%of theworld pulp.a. Table 1 below representsyour data series (in areal world scenario,your series might consistofhundreds of datapoints). ThevariableX is theworld pricein current dollarsper ton. So for example, the first variable is \$792.32 per metricton. Theothervariable Yispulp shipments in millions of metrictons.
PulpShipments(millionsofmetrictons)b. Table 2 is ascatter plot of therelationship between pulp prices and shipments.TABLE 2: Scatter Plot of Pulp Shipments4035302520151050500 550 600 650 700 750 800 850 900WorldPulpPrice (dollars per ton)c. Table 3 is theregressionequationmodel predictingthe relationship between price and pulpshipments.
X792.32Y10.4486811.4801.0911.08715.8711.7723.3612.74748.3214.01765.3715.11755.3215.26749.4115.55713.5416.81685.1818.21677.3119.42644.5920.18619.7121.4645.8323.63641.9524.96611.9726.58587.8227.57518.0130.38513.2433.07577.4133.81569.1733.19516.7535.15612.1827.45831.0413.96TABLE 1: Data Series (inmillions ofmetrictons)Table 3:Results of Simple RegressionSUMMARYOUTPUTRegressionStatisticsMultipleR 0.93090555R Square 0.86658515AdjustedRSquare 0.8607845Standard Error 3.01409615Observations 25CoefficientsStandardError tStat P-value1.4571E-Intercept 71.6681527 4.19529532 17.0829816XVariable1 -0.0751354 0.0061472 -12.222708141.5299E-11QUESTIONS:(1)What does thescatter plot tellyou about therelationship between price andshipments?Dont tellmean it’s linear becausethat is not the answer.(2)What does the adjusted R squaretellyou about thecorrelation between price and shipments?

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