SCENARIO 17-5
You Worked as an Intern at We Always

question 87

Short Answer

SCENARIO 17-5
You worked as an intern at We Always Win Car Insurance Company last summer. You notice that
individual car insurance premiums depend very much on the age of the individual, the number of
traffic tickets received by the individual, and the population density of the city in which the individual
lives. You performed a regression analysis in EXCEL and obtained the following information: $\begin{array}{l}\begin{array}{lr}\hline {\text { Regression Statistics }} \\\hline \text { Multiple R } & 0.63 \\\text { R Square } & 0.40 \\\text { Adjusted R Square } & 0.23 \\\text { Standard Error } & 50.00 \\\text { Observations } & 15.00 \\\hline\end{array}\\\\\text { ANOVA }\\\begin{array}{lrcccr}\hline & d f &{\text { SS }} & \text { MS } & \text { F }&{\text { Significance } F} \\\hline \text { Regression } & 3 & & 5994.24 & 2.40 & 0.12 \\\text { Residual } & 11 & 27496.82 & & & \\\text { Total } & & 45479.54 & & & \\\hline\end{array}\\\\\begin{array}{lrrrrrr}\hline & \text { Coefficients } & \begin{array}{c}\text { Standard } \\\text { Error }\end{array} & \text { t Stat } & \text { P-value } & \text { Lower 99.0\% } & \text { Upper 99.0\% } \\\hline \text { Intercept } & 123.80 & 48.71 & 2.54 & 0.03 & -27.47 & 275.07 \\\text { AGE } & -0.82 & 0.87 & -0.95 & 0.36 & -3.51 & 1.87 \\\text { TICKETS } & 21.25 & 10.66 & 1.99 & 0.07 & -11.86 & 54.37 \\\text { DENSITY } & -3.14 & 6.46 & -0.49 & 0.64 & -23.19 & 16.91 \\\hline\end{array}\end{array}$
AGE -0.82 0.87 -0.95 0.36 -3.51 1.87
TICKETS 21.25 10.66 1.99 0.07 -11.86 54.37
DENSITY -3.14 6.46 -0.49 0.64 -23.19 16.91
-Referring to Scenario 17-5, the proportion of the total variability in insurance premiums that
can be explained by AGE, TICKETS, and DENSITY is _________.

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Definitions:

Capacity Utilization

The percentage of an entity's total production capacity that is actually being used over a specific period.

Motor Carrier

A company or individual providing transportation services for goods by motor vehicles, such as trucks.

Trucking Industry

The sector of transportation that deals with the movement of goods over land by trucks, playing a critical role in supply chains and logistics.

Container Shipments

The transportation of goods in large, standardized containers, facilitating efficient handling and transfer between different modes of transport.