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Regression Analysis! Research Paper

Regression Analysis! Research Paper

Your boss is about to start production of her newest box office smash-to-be, Invasion of the Economists, Part II, The Invisible Hand Strikes Back, when she calls you in and tells you to build a model of the gross receipts of all the movies produced in the last five years. Your regression is (standard errors in parentheses) : where G = final gross receipts in thousands of dollars T = the numbers of screens on which the film was shown F = a dummy variable equal to 1 if the star was female J = a dummy variable equal to 1 if the movie was released in June or July S = a dummy variable equal to 1 if the star was a superstar (like Milton Friedman) B = a dummy equal to 1 if at least one member of the supporting cast is a superstar A. Hypothesize signs for each of the slope coefficients in the equation. Which, if any, of the signs of the estimated coefficients are different from your expectations? B. Milton Friedman, an undisputed superstar and the star of the original film, is demanding $4M from your boss to appear in the sequel. If your estimates are trustworthy, should she say yes, or should she hire Ian Lange, a lesser known but very talented economist, who will do the movie for $500,000? C. Your boss wants to keep costs low, and it would cost $1.2M to release the movie on an additional 200 screens. Assuming your estimates are trustworthy, should she spring for the extra screens? D. The movie is scheduled for release in September, and it would cost $2M to speed up production enough to allow a July release without hurting quality. Assuming your estimates are trustworthy, is it worth the rush?

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