Question: Assessing collinearity in themovie revenue model. Many software packages will calculate VIF values for each explanatory variable. In this exercise, you will calculate the VIF

Assessing collinearity in themovie revenue model. Many software packages will calculate VIF values for each explanatory variable. In this exercise, you will calculate the VIF values using several multiple regressions and then use them to see if there is collinearity among the movie explanatory variables.

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(a) Use statistical software to estimate the multiple regression model for predicting Budget based on Opening and Theaters.

Calculate the VIF value for Budget using R2 from this model and the formula VIF = 1 1 − R2

(b) Use statistical software to estimate the multiple regression model for predicting Opening based on Budget and Theaters.

Calculate the VIF value for Opening using R2 from this model and the formula from part (a).

(c) Use statistical software to estimate the multiple regression model for predicting Theaters based on Budget and Opening.

Calculate the VIF value for Theaters using R2 from this model and the formula from part (a).

(d) Do any of the calculated VIF values indicate severe collinearity among the explanatory variables? Explain your response.

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