Here is the regression for Exercise 3 with an indicator variable:

Dependent variable is: USGross($M)

R-squared = 33.8%  R-squared (adjusted) = 31.4% s = 46.50 with 58 - 3 = 55 degrees of freedom

Variable   Coefficient SE(Coeff) t-ratio P-value

40              80            120           160

Budget ($M)

a) What attributes of this plot suggest that it would be appropriate to use both an indicator variable and an inter- action term in a regression of USGross on Budget?

b) How would you code the indicator variable? (Use Adventure as the base level.)

c) How would you construct the interaction term variable?