The Variable X is the World Price

Added on - 16 Sep 2019

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PART V:PROBLEMSET:PROBLEM(1):(10points)(1)Thisis asimpleregression problem. Youareadataanalyst with theU.S.Department of Commerce.You havegathered information fromthedepartment’s datawarehouseon theworld priceof pulp and theexports ofpulpto therest of theworld.You havebeenasked toseewhatwould be theeffect ofa$1increaseinthepriceofpulp on shipments fromtheUnited States.AssumetheUnitedStates produces100%of theworld pulp.a.Table 1 belowrepresentsyourdata series (in areal world scenario,your series might consistofhundreds of datapoints). ThevariableX is theworld pricein current dollarsper ton. So forexample, thefirst variable is $792.32 per metricton. Theothervariable Yispulp shipmentsinmillions of metrictons.
PulpShipments(millionsofmetrictons)b. Table 2 is ascatter plot of therelationship between pulp pricesand shipments.TABLE 2:Scatter Plot ofPulpShipments4035302520151050500550600650700750800850900WorldPulpPrice (dollarsper ton)c.Table 3 is theregressionequationmodel predictingtherelationship between priceand 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 ofSimpleRegressionSUMMARYOUTPUTRegressionStatisticsMultipleR0.93090555RSquare0.86658515AdjustedRSquare0.8607845StandardError3.01409615Observations25CoefficientsStandardErrortStatP-value1.4571E-Intercept71.66815274.1952953217.0829816XVariable1-0.07513540.0061472-12.222708141.5299E-11QUESTIONS:(1)What does thescatter plottellyouabouttherelationship between priceandshipments?Donttellmean it’s linearbecausethat is nottheanswer.(2)What does theadjusted R squaretellyouaboutthecorrelation betweenpriceand shipments?
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