Chapter 15, Problem 1CP

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. Data were collected on annual income, household size, and annual credit card charges for a sample of 50 consumers. The following data are contained in the file Consumer.

Source: Consumer Research, Inc. (https://www.bbb.org/us/ny/rochester/profile/secret-shopper/consumer-research -inc-0041-45625697)

Managerial Report

1. 1. Use methods of descriptive statistics to summarize the data. Comment on the findings.
2. 2. Develop estimated regression equations, first using annual income as the independent variable and then using household size as the independent variable. Which variable is the better predictor of annual credit card charges? Discuss your findings.
3. 3. Develop an estimated regression equation with annual income and household size as the independent variables. Discuss your findings.
4. 4. What is the predicted annual credit card charge for a three-person household with an annual income of $40,000?
5. 5. Discuss the need for other independent variables that could be added to the model. What additional variables might be helpful?