ECS3706 MAY/JUNE 2025 EXAM (Answer Guide) – Due 31 may 2025

ECS3706
MAY/JUNE 2025
EXAM (Answer
Guide) – Due 31
may 2025
QUESTIONS WITH 100%
VERIFIED AND
CERTIFIED ANSWERS.






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ECS3706 MAY/JUNE 2025 EXAM (Answer Guide) – Due 31 may 2025

QUESTIONS WITH 100% VERIFIED AND CERTIFIED ANSWERS. WRITTEN IN
REQUIRED FORMAT AND WITHIN GIVEN GUIDELINES. IT IS GOOD TO USE AS A
GUIDE AND FOR REFERENCE, NEVER PLAGARIZE. Thank you and success in
your academics.

UNISA, 2025.


Contents
SECTION A ................................................................................................................................................. 1
Question A1(a): Provide examples of how regression analysis can be used in real life.
Demonstrate using the six steps in applied regression analysis. Do not use the Woody’s
restaurant location example given in the prescribed book. ............................................................. 1
Question A2: For each functional form below, provide practical examples of where these can
be used. In addition, explain how the coefficients, β₁, β₂, and β₃ can be interpreted. ................ 7
Question A3: ........................................................................................................................................... 9
SECTION B ............................................................................................................................................... 12
Question B1 .......................................................................................................................................... 12
Question B2 .......................................................................................................................................... 15
Question B3 .......................................................................................................................................... 18




SECTION A

Question A1(a): Provide examples of how regression analysis can be used in real life.
Demonstrate using the six steps in applied regression analysis. Do not use the Woody’s
restaurant location example given in the prescribed book.

Answer:

Example of Regression Analysis in Real Life: Predicting Residential Electricity
Consumption

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A practical application of regression analysis is in the energy sector, where utility
companies may want to predict household electricity consumption based on various
household characteristics. This kind of analysis helps utilities improve energy supply
planning, tariff setting, and customer advisory services.

The application of regression analysis in this context can be demonstrated using the six
steps in applied regression analysis as follows:

Step 1: Model Specification

The first step involves specifying a theoretical model based on prior knowledge and
logical reasoning. For this example, the dependent variable is monthly electricity
consumption (in kilowatt-hours), and the independent variables include the size of the
house (in square metres), the household's monthly income (in rands), and a dummy
variable indicating whether the household has an air conditioning (AC) system.

The model can be specified as:

Electricity_i = β₀ + β₁(Size_i) + β₂(Income_i) + β₃(AC_i) + ε_i

Where:

• Electricity_i = electricity consumption for household i
• Size_i = size of the household in square metres
• Income_i = monthly household income
• AC_i = a dummy variable equal to 1 if the household has air conditioning, 0
otherwise
• ε_i = stochastic error term

Step 2: Data Collection

The next step is to collect relevant data from a representative sample of households.
Data can be obtained through household surveys or from smart electricity meters. The