FINAL EXAM QUESTIONS 2020
Theory - 20 questions
Week 1 Questions
Q1. If the explained sum of squares is 35 and the total sum of squares is 49, what is the
residual sum of squares?
A. 10
B. 14
C. 12
D. 18
Solutio
...
FINAL EXAM QUESTIONS 2020
Theory - 20 questions
Week 1 Questions
Q1. If the explained sum of squares is 35 and the total sum of squares is 49, what is the
residual sum of squares?
A. 10
B. 14
C. 12
D. 18
Solution: B
Explanation: Total Sum of Squares = Explained Sum of Squares + Residual Sum of Squares
SST = SSE + SSR
SSR = SST – SSE = 49 – 35 = 14
Week 2 Questions
Q2. Consider a regression model predicting the amount someone has spent (on some
arbitrary product) based on their salary and age. To improve the model we have created an
interaction variable between Salary and Age. Assume salary given in dollars, and age in
years.
b0 = 500
b1 = 0.35
b2 = 0.12
b3=0.21
AmountSpent = b0 + b1Salary + b2Age + b3SalaryAge
How much more will a 30-year old person with a salary of $20,000 spend than a person who
is 2 years older and earns $5000 less than him/her?
a)17500
b)33249.54
c)26949.76
d)26950.24
Solution: (c) Week2 Lesson 4
DifInAmountSpent = b1 * (Dif in Salary) + b2*(Dif in Age) + b3* (Dif in (Salary*Age))
DifInAmountSpent = 0.35*(5000) +0.12*(-2) + 0.21 * (120,000) = 26949.76
Week 3 Questions
Q3 Given the independent variable X and dependent variable Y, we regress Y on log(X) and
get the following formula: Y = b1 * log(X) + b0 where b1 and b0 are the
estimated coefficient and intercept respectively from OLS regression. How should we
interpret it?
A. As X increases by 1 unit, Y increases by b1 units
B. As X increases by 1%, Y increases by 0.01 b1 units
C. As X increases by 1 unit, Y increases by 100( eb1−1 )%
D. As X increases by 1%, Y increases by 100( e0.01b1−1 )%
Answer: B
As X increases by 1%, log(X) becomes log(X) + 0.01 and y_new = b1 *(log(X) + 0.01) +
b0 = y_old + 0.01 b1
Refer to Week 3 TA session notes
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