Install and load the dataset named Carseats (in the ISLR package) into R.

Create a new dataframe that is a copy of Carseats. Create two indicator (dummy) variables:

Bad_Shelf = 1 if ShelveLoc = "Bad", 0 otherwise

Good_Shelf = 1 if ShelveLoc = "Good", 0 otherwise

Also, create two interaction variables:

Price_Bad_Shelf = Price* Bad_Shelf

Price_Good_Shelf = Price* Good_Shelf

For Questions 1-2, please estimate a linear regression model (using the lm function) with Sales as the dependent variable and Price, Bad_Shelf, Good_Shelf, Price_Bad_Shelf, and Price_Good_Shelf as independent variables.

Question 1

For the model, does Bad_Shelf have an Intercept significantly (statistically) different from that of the base case?

a) Yes

b) No

c) Maybe

d) Not enough information

Question 2

For the model in Question 2, do the products located on Good_Shelf have a significantly (statistically) different Price coefficient from that of the base case?

a) Yes

b) No

c) Maybe

d) Not enough information

Jobs and productivity! how do retail stores rate? one way to answer this question is to examine annual profits per employee. the following data give annual profits per employee (in units of 1 thousand dollars per employee) for companies in retail sales. assume σ ≈ 4.0 thousand dollars. 3.7 6.7 3.6 8.5 7.5 5.9 8.7 6.4 2.6 2.9 8.1 −1.9 11.9 8.2 6.4 4.7 5.5 4.8 3.0 4.3 −6.0 1.5 2.9 4.8 −1.7 9.4 5.5 5.8 4.7 6.2 15.0 4.1 3.7 5.1 4.2 (a) use a calculator or appropriate computer software to find x for the preceding data. (round your answer to two decimal places.) thousand dollars per employee (b) let us say that the preceding data are representative of the entire sector of retail sales companies. find an 80% confidence interval for μ, the average annual profit per employee for retail sales. (round your answers to two decimal places.) lower limit -- thousand dollars upper limit -- thousand dollars (c) let us say that you are the manager of a retail store with a large number of employees. suppose the annual profits are less than 3 thousand dollars per employee. do you think this might be low compared with other retail stores? explain by referring to the confidence interval you computed in part (b). yes. this confidence interval suggests that the profits per employee are less than those of other retail stores. no. this confidence interval suggests that the profits per employee do not differ from those of other retail stores. correct: your answer is correct. (d) suppose the annual profits are more than 6.5 thousand dollars per employee. as store manager, would you feel somewhat better? explain by referring to the confidence interval you computed in part (b). yes. this confidence interval suggests that the profits per employee are greater than those of other retail stores. no. this confidence interval suggests that the profits per employee do not differ from those of other retail stores. (e) find an 95% confidence interval for μ, the average annual profit per employee for retail sales. (round your answers to two decimal places.) lower limit 3.75 incorrect: your answer is incorrect. thousand dollars upper limit 6.41 incorrect: your answer is incorrect. thousand dollars