Instruction 16-6
Given Below Are Results from the Regression Analysis

question 19

True/False

Instruction 16-6
Given below are results from the regression analysis on 40 observations where the dependent variable is the number of weeks a worker is unemployed due to a layoff (Y) and the independent variables are the age of the worker (X₁), the number of years of education received (X₂), the number of years at the previous job (X₃), a dummy variable for marital status (X₄: 1 = married, 0 = otherwise), a dummy variable for head of household (X₅: 1 = yes, 0 = no) and a dummy variable for management position (X₆: 1 = yes, 0 = no).
The coefficient of multiple determination (R²_j) the regression model using each of the 6 variables X_j as the dependent variable and all other X variables as independent variables are, respectively, 0.2628, 0.1240, 0.2404, 0.3510, 0.3342 and 0.0993.
The partial results from best-subset regression are given below:
$$\begin{array} { | l | l | l | l | } \hline \text { Model } & \text { R Square } & \text { Adj. R Square } & \text { Std. Error } \\\hline X _ { 1 } X _ { 5 } X _ { 6 } & 0.4568 & 0.4116 & 18.3534 \\\hline X _ { 1 } X _ { 2 } X _ { 5 } X _ { 6 } & 0.4697 & 0.4091 & 18.3919 \\\hline X _ { 1 } X _ { 3 } X _ { 5 } X _ { 6 } & 0.4691 & 0.4084 & 18.4023 \\\hline X _ { 1 } X _ { 2 } X _ { 3 } X _ { 5 } X _ { 6 } & 0.4877 & 0.4123 & 18.3416 \\\hline X _ { 1 } X _ { 2 } X _ { 3 } X _ { 4 } X _ { 5 } X _ { 6 } & 0.4949 & 0.4030 & 18.4861 \\\hline\end{array}$$
-Referring to Instruction 16-6,the variable X₃ should be dropped to remove collinearity.

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Definitions:

Incremental Sales

Additional sales generated by a new promotional strategy or marketing campaign, beyond the expected or normal sales volume.

Operating Expenses

Costs that a business incurs through its normal business operations, excluding the cost of goods sold.

Renovation Cost

Expenses incurred in updating or improving a fixed asset, such as buildings or equipment, to increase its value or extend its useful life.

Working Capital

The contrast between a firm's current holdings and its due obligations, highlighting the accessible funds for running its business activities.