Reference no: EM132850756

Question:

Consider again the example introduced in Section 7.5 of a credit card company that has a database of information provided by its customers when they apply for credit cards. An analyst has created a multiple regression model for which the dependent variable in the model is credit card charges accrued by a customer in the data set over the past year ( y ), and the independent variables are the customer's annual household income (x 1 ), number of members of the household (x 2), and number of years of post-high school education (x 3). Figure 7.23 provides Excel output for a multiple regression model estimated using a data set the company created.

b. Estimate the corresponding simple linear regression with the number of members in the customer's household as the independent variable and credit card charges accrued by a customer over the past year as the dependent variable. Interpret the estimated relationship between the number of members in the customer's household and credit card charges accrued over the past year. How much variation in credit card charges accrued by a customer over the past year is explained by this simple linear regression model?