Expert Answer :EMBA Analytics Quiz 1 – We begin by running a basi

Solved by a verified expert :EMBA Analytics Quiz 1You, as an executive, have been asked to serve as a media consultant for a Hollywood studiowondering if there are certain reasons why some movies are profitable and other are not.You have been handed a medium dataset with information on nearly 3000 movies. You are toinfer some patterns and use that to predict if the studio’s current portfolio will be profitable.You began by ensuring that the data was clean and removed errant outliers, possibly from dataentry errors. Upon a very smart recommendation by someone (let’s call him Matt), we changedthe outcome into a ratio that allows us not worry about currencies and conversions. Perfectexample of normalizing an absolute value.1. We begin by running a basic regression model into order to understand three importantaspects:a. How much do the reasons we think matter in explaining movie profits actuallymatter? Is that a decent number or not? How would you explain? Hint- AdjustedR-square.b. What is the role of the intercept? Why should it matter to a manager? If youpredicted perfectly (R-square of 1), is it likely you would have an intercept?c. Which of the reasons for movie profitability matter and what reasons appear notto matter in explaining movie profits? How did you pick the ones that matterversus the ones that did not?d. Of the reasons that are relevant and reliable, which ones have the most impactand the least impact on profitability? (note that a high negative is still a highimpact, just in an opposite direction)2. Once we have run the initial model and explained our findings to the studio, the studiowants us to build a model that will predict profitability.a. Can you use the initial model to predict? Why not?b. Rerun the regression for the prediction model. Write the prediction model in theformat: Y (outcome) = a + b1x1 + b2x2 +….. + errorc. Now much do the reasons in your new prediction model explain movieprofitability?d. Are all the reasons reliable? Have their impacts changed?e. Based on historical data from similar movies, the studio wants to know howmuch their scheduled movie screenplays are supposed to return on investments.They are considering two movie screenplays. One movie is 170 minutes long, islikely to have 200,000 Facebook likes, 300,000 voted users, $250 million budget,and might end up with an 8 IMDB score. Another movie is 140 minutes long, islikely to have 250,000 Facebook likes, 200,000 voted users, $280 million budget,and might end up with an 9 IMDB score. What is the profitability ratio for eachmovie? Which movie would you greenlight?