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

question 110

True/False

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:  Regression Statistics  Multiple R 0.63 R Square 0.40 Adjusted R Square 0.23 Standard Error 50.00 Observations 15.00 ANOVA df SS  MS  F  Significance F Regression 35994.242.400.12 Residual 1127496.82 Total 45479.54 Coefficients  Standard  Error  t Stat  P-value  Lower 99.0%  Upper 99.0%  Intercept 123.8048.712.540.0327.47275.07 AGE 0.820.870.950.363.511.87 TICKETS 21.2510.661.990.0711.8654.37 DENSITY 3.146.460.490.6423.1916.91\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, to test the significance of the multiple regression
model, the null hypothesis should be rejected while allowing for 1% probability of committing a
type I error.

Understand the concept of unemployment and its implications on the economy.
Grasp the law of increasing costs and its relevance to economic decision-making.
Identify the factors that contribute to the law of increasing costs.
Comprehend the concept of opportunity cost and its critical role in economic choices.

Definitions:

Debtor

A party that owes money to another party.

Proceeds

Something that is exchanged for a debtor’s sold collateral.

Security Interest

A legal claim or lien on collateral that secures the repayment of a debt or obligation, giving the lender rights in the collateral.

Secured Party

The party that holds the interest in a secured property.

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