ECON 1030 - BUSINESS STATISTICS 1 PROJECT (FRIDAY) Instructions: This is a project where you can work alone or with two other students (a maximum...

ECON 1030 – BUSINESS STATISTICS 1 PROJECT (FRIDAY)

Instructions:

This is a project where you can work alone or with two other students (a maximum group size of three). All group members will receive the same marks for the assignment. All group members must be enrolled in the same tutorial. The assignment must be provided in the form of a (brief) business report approximately 8-14 pages. You must submit an electronic copy of your assignment in Blackboard. Hard copies will not be accepted. SHOW YOUR WORK for calculation based questions.

This assignment requires the use of Microsoft Excel. If you have Windows, you will also need to use the Data Analysis ToolPak. If you have a Mac with Excel 2011, you will need to use StatPlus:MAC LE.

Problem Description:

The Motion Picture Distributors Association of Australia has contacted us to explore recent film watching habits in theatres from the United States. It believes that sequels are increasingly a box office draw and that new intellectual properties are not receiving much attention. A sample of 77 films playing in 2015 through the United States has been collected. Several characteristics including gross revenue, the number of theatres screened, the metacritic score, whether it is a sequel as well as the genre have been included in the table.

You will use descriptive statistics, inferential statistics and your knowledge of multiple linear regression to complete this task.

Price (Dependent Variable) and several characteristics (Independent Variables) are given in the Excel file: Friday.xlsx.

Here is a table describing the variables in the data set:

Required:

1. Film critics also claim that film audiences do not care about the quality of the film. Any action film guarantees that it will gross more than $100 million. Test their claim at the 10% level of significance. (1 Mark)

2. Run a multiple linear regression using the data and show the output from Excel. Exclude the dummy variable “Thriller” from the regression results. (1 Mark)

3. Is the coefficient estimate for Theatres statistically different than zero at the 5% level of significance? Set-up the correct hypothesis test using the results found in the table in Part (G) using both the critical value and p-value approach. Interpret the coefficient estimate of the slope. (2 Marks)

4. Interpret the remaining slope coefficient estimates. Discuss whether the signs are what you are expecting and explain your reasoning. (2 Marks)

5. Interpret the value of the Adjusted R2. Is there a large difference between the R2 and the Adjusted R2? If so, what may explain the reasoning for this? (1/2 Mark)

6. Is the overall model statistically significant at the 5% level of significance? Use the p-value approach. (1/2 Mark)

7. Based on the results of the regressions, what other factors would have influenced the gross revenue? Provide a couple possible examples and indicate their predicted relationship with the gross revenue if they were included. (1 Mark)

8. Predict the average gross revenue of an action film with a metacritic score of 30 if it shows in 4,000 theatres, but it is not a sequel or a reboot if it is appropriate to do so. Show the predicted regression equation. (1 Mark)

9. Do the results suggest that the data satisfy the assumptions of a linear regression: Linearity, Normality of the Errors, and Homoscedasticity of Errors? Show using scatter diagrams, normal probability plots and/or histograms and Explain. (2 Marks)

10. Would these results likely tell us anything about how well Australian-made films will perform in Australia? If not, describe a scenario in how you would construct a sample of Australian films to predict their performance. (1 Mark)