Consumer Research

Consumer Research, Inc., is an independent agency that conducts research on consumer attitudes and behaviors for a variety of firms. In one study, a client asked for an investigation of consumer characteristics that can be used to predict the amount charged by credit card users in Table 5. Data were collected on annual income, household size, and annual credit card charges for a sample of 50 consumers.

1. Provide descriptive statistics of the data, develop a multiple regression model that can be used to predict the Amount Charged given the Annual Income and Household Size, state the hypotheses on the coefficients, justify formulation of these hypotheses, and interpret the results. Use ɑ = .05. Include all phases of assessment of the model and do not forget to check multicollinearity.

2. To assess robustness of the software, repeat part (a) but this time use full representation of Annual Income. What conclusions can you make?

3. Choose a combination of Annual Income and Household Size not given in the table and find the expected Amount Charged for this combination. Show work for this one. Just make up the value for income and household size and for those values calculate amount charged using the equation derived in the first part of assignment.

Use ɑ = .05 in testing all hypotheses

Table 5

Data on Annual Income, Household size, Amount of Credit Changed

Income ($1000’s)

Household size

Amount charged ($)

Income

Size

Charged

54

3

4016

54

6

5573

30

2

3159

30

1

2583

32

4

5100

48

2

3866

50

5

4742

34

5

3586

31

2

1864

67

4

5037

55

2

4070

50

2

3605

37

1

2731

67

5

5345

40

2

3348

55

6

5370

66

4

4764

52

2

3890

51

3

4110

62

3

4705

25

3

4208

64

2

4157

48

4

4219

22

3

3579

27

1

2477

29

4

3890

33

2

2514

39

2

2972

65

3

4214

35

1

3121

63

4

4965

39

4

4183

42

6

4412

54

3

3730

21

2

2448

23

6

4127

44

1

2995

27

2

2921

37

5

4171

26

7

4603

62

6

5678

61

2

4273

21

3

3623

30

2

3067

55

7

5301

22

4

3074

42

2

3020

46

5

4820

41

7

4828

66

4

5149

*Please refer to the Grading Criteria for Professional Assignments in the University Policies for specific guidelines and expectations.