• Home
  • Textbooks
  • Statistics for Business and Economics
  • Simple Linear Regression

Statistics for Business and Economics

David R. Anderson, Dennis J. Sweeney, Thomas A. Williams

Chapter 14

Simple Linear Regression - all with Video Answers

Educators

WM

Chapter Questions

View

Problem 1

Given are five observations for two variables, $x$ and $y$.
$$
\begin{array}{r|rrrrr}
\boldsymbol{x}_{\boldsymbol{i}} & 1 & 2 & 3 & 4 & 5 \\
\hline \boldsymbol{y}_{\boldsymbol{i}} & 3 & 7 & 5 & 11 & 14
\end{array}
$$
a. Develop a scatter diagram for these data.
b. What does the scatter diagram developed in part (a) indicate about the relationship between the two variables?
c. Try to approximate the relationship between $x$ and $y$ by drawing a straight line through the data.
d. Develop the estimated regression equation by computing the values of $b_0$ and $b_1$ using equations (14.6) and (14.7).
e. Use the estimated regression equation to predict the value of $y$ when $x=4$.

Victor Salazar
Victor Salazar
Numerade Educator
05:34

Problem 2

Given are five observations for two variables, $x$ and $y$.
$$
\begin{array}{r|rrrrr}
\boldsymbol{x}_{\boldsymbol{i}} & 3 & 12 & 6 & 20 & 14 \\
\hline \boldsymbol{y}_{\boldsymbol{i}} & 55 & 40 & 55 & 10 & 15
\end{array}
$$
a. Develop a scatter diagram for these data.
b. What does the scatter diagram developed in part (a) indicate about the relationship between the two variables?
c. Try to approximate the relationship between $x$ and $y$ by drawing a straight line through the data.
d. Develop the estimated regression equation by computing the values of $b_0$ and $b_1$ using equations (14.6) and (14.7).
e. Use the estimated regression equation to predict the value of $y$ when $x=10$.

WM
William Mead
Numerade Educator
View

Problem 3

Given are five observations collected in a regression study on two variables.
$$
\begin{array}{r|rrrrr}
\boldsymbol{x}_{\boldsymbol{i}} & 2 & 6 & 9 & 13 & 20 \\
\hline \boldsymbol{y}_{\boldsymbol{i}} & 7 & 18 & 9 & 26 & 23
\end{array}
$$
a. Develop a scatter diagram for these data.
b. Develop the estimated regression equation for these data.
c. Use the estimated regression equation to predict the value of $y$ when $x=6$.

Victor Salazar
Victor Salazar
Numerade Educator
01:49

Problem 4

The following data were collected on the height (inches) and weight (pounds) of women swimmers.
$$
\begin{array}{l|rrrrr}
\text { Height } & 68 & 64 & 62 & 65 & 66 \\
\hline \text { Weight } & 132 & 108 & 102 & 115 & 128
\end{array}
$$
a. Develop a scatter diagram for these data with height as the independent variable.
b. What does the scatter diagram developed in part (a) indicate about the relationship between the two variables?
c. Try to approximate the relationship between height and weight by drawing a straight line through the data.
d. Develop the estimated regression equation by computing the values of $b_0$ and $b_1$.
e. If a swimmer's height is 63 inches, what would you estimate her weight to be?

Adriano Chikande
Adriano Chikande
Numerade Educator
02:11

Problem 5

Elliptical trainers are becoming one of the more popular exercise machines. Their smooth and steady low-impact motion makes them a preferred choice for individuals with knee and ankle problems. But selecting the right trainer can be a difficult process. Price and quality are two important factors in any purchase decision. Are higher prices generally associated with higher quality elliptical trainers? Consumer Reports conducted extensive tests to develop an overall rating based on ease of use, ergonomics, construction, and exercise range. The following data show the price and rating for eight elliptical trainers tested (Consumer Reports, February 2008).
$$
\begin{array}{lcc}
\text { Brand and Model } & \text { Price (\$) } & \text { Rating } \\
\text { Precor 5.31 } & 3700 & 87 \\
\text { Keys Fitness CG2 } & 2500 & 84 \\
\text { Octane Fitness Q37e } & 2800 & 82 \\
\text { LifeFitness X1 Basic } & 1900 & 74 \\
\text { NordicTrack AudioStrider 990 } & 1000 & 73 \\
\text { Schwinn 430 } & 800 & 69 \\
\text { Vision Fitness X6100 } & 1700 & 68 \\
\text { ProForm XP 520 Razor } & 600 & 55
\end{array}
$$
a. Develop a scatter diagram with price as the independent variable.
b. An exercise equipment store that sells primarily higher priced equipment has a sign over the display area that says "Quality: You Get What You Pay For." Based upon your analysis of the data for ellipical trainers, do you think this sign fairly reflects the pricequality relationship for elliptical trainers?
c. Use the least squares method to develop the estimated regression equation.
d. Use the estimated regression equation to predict the rating for an ellipitical trainer with a price of $$\$ 1500$$.

Adriano Chikande
Adriano Chikande
Numerade Educator
02:12

Problem 6

The cost of a previously owned car depends upon factors such as make and model, model year, mileage, condition, and whether the car is purchased from a dealer or from a private seller. To investigate the relationship between the car's mileage and the sales price, data were collected on the mileage and the sale price for 10 private sales of model year 2000 Honda Accords (PriceHub website, October 2008).
$$
\begin{array}{cc}
\begin{array}{c}
\text { Miles } \\
(\mathbf{1 0 0 0 s})
\end{array} & \begin{array}{c}
\text { Price } \\
(\mathbf{1 0 0 0 s})
\end{array} \\
90 & 7.0 \\
59 & 7.5 \\
66 & 6.6 \\
87 & 7.2 \\
90 & 7.0 \\
106 & 5.4 \\
94 & 6.4 \\
57 & 7.0 \\
138 & 5.1 \\
87 & 7.2
\end{array}
$$
a. Develop a scatter diagram with miles as the independent variable.
b. What does the scatter diagram developed in part (a) indicate about the relationship between the two variables?
c. Use the least squares method to develop the estimated regression equation.
d. Provide an interpretation for the slope of the estimated regression equation.
e. Predict the sales price for a 2000 Honda Accord with 100,000 miles.

Adriano Chikande
Adriano Chikande
Numerade Educator
01:49

Problem 7

A sales manager collected the following data on annual sales and years of experience.
$$
\begin{array}{ccc}
\text { Salesperson } & \begin{array}{c}
\text { Years of } \\
\text { Experience }
\end{array} & \begin{array}{c}
\text { Annual Sales } \\
\mathbf{( \$ 1 0 0 0 s )}
\end{array} \\
1 & 1 & 80 \\
2 & 3 & 97 \\
3 & 4 & 92 \\
4 & 4 & 102 \\
5 & 6 & 103 \\
6 & 8 & 111 \\
7 & 10 & 119 \\
8 & 10 & 123 \\
9 & 11 & 117 \\
10 & 13 & 136
\end{array}
$$
a. Develop a scatter diagram for these data with years of experience as the independent variable.
b. Develop an estimated regression equation that can be used to predict annual sales given the years of experience.
c. Use the estimated regression equation to predict annual sales for a salesperson with 9 years of experience.

Nick Johnson
Nick Johnson
Numerade Educator
01:29

Problem 8

Bergans of Norway has been making outdoor gear since 1908. The following data show the temperature rating $\left(\mathrm{F}^{\circ}\right)$ and the price
$$
(\$)
$$
for 11 models of sleeping bags produced by Bergans (Backpacker 2006 Gear Guide).
a. Develop a scatter diagram for these data with temperature rating $\left(\mathrm{F}^{\circ}\right)$ as the independent variable.
b. What does the scatter diagram developed in part (a) indicate about the relationship between temperature rating $\left(\mathrm{F}^{\circ}\right)$ and price?
c. Use the least squares method to develop the estimated regression equation.
d. Predict the price for a sleeping bag with a temperature rating $\left(\mathrm{F}^{\circ}\right)$ of 20.
(FIGURE CAN'T COPY)

Adriano Chikande
Adriano Chikande
Numerade Educator
02:11

Problem 9

To avoid extra checked-bag fees, airline travelers often pack as much as they can into their suitcase. Finding a rolling suitcase that is durable, has good capacity, and is easy to pull can be difficult. The following table shows the results of tests conducted by Consumer Reports for 10 rolling suitcases; higher scores indicate better overall test results (Consumer Reports website, October 2008).
$$
\begin{array}{lcc}
\text { Brand } & \text { Price (\$) } & \text { Score } \\
\text { Briggs \& Riley } & 325 & 72 \\
\text { Hartman } & 350 & 74 \\
\text { Heys } & 67 & 54 \\
\text { Kenneth Cole Reaction } & 120 & 54 \\
\text { Liz Claiborne } & 85 & 64 \\
\text { Samsonite } & 180 & 57 \\
\text { Titan } & 360 & 66 \\
\text { TravelPro } & 156 & 67 \\
\text { Tumi } & 595 & 87 \\
\text { Victorinox } & 400 & 77
\end{array}
$$
a. Develop a scatter diagram with price as the independent variable.
b. What does the scatter diagram developed in part (a) indicate about the relationship between the two variables?
c. Use the least squares method to develop the estimated regression equation.
d. Provide an interpretation for the slope of the estimated regression equation.
e. The Eagle Creek Hovercraft suitcase has a price of $\$ 225$. Predict the score for this suitcase using the estimated regression equation developed in part (c).

Adriano Chikande
Adriano Chikande
Numerade Educator
03:08

Problem 10

According to Advertising Age's annual salary review, Mark Hurd, the 49-year-old chairman, president, and CEO of Hewlett-Packard Co., received an annual salary of $$\$ 817,000$$, a bonus of more than $$\$ 5$$ million, and other compensation exceeding $$\$ 17$$ million. His total compensation was slightly better than the average CEO total pay of $$\$ 12.4$$ million. The following table shows the age and annual salary (in thousands of dollars) for Mark Hurd and 14 other executives who led publicly held companies (Advertising Age, December 5, 2006).
$$
\begin{array}{|c|c|c|c|c|}
\hline \text { Executive } & \text { Title } & \text { Company } & \text { Age } & \begin{array}{c}
\text { Salary } \\
(\$ 1000 s)
\end{array} \\
\hline \text { Charles Prince } & \mathrm{Chmn} / \mathrm{CEO} & \text { Citigroup } & 56 & 1000 \\
\hline \text { Harold McGraw III } & \text { Chmn/Pres/CEO } & \text { McGraw-Hill Cos. } & 57 & 1172 \\
\hline \text { James Dimon } & \text { Pres/CEO } & \text { JP Morgan Chase \& Co. } & 50 & 1000 \\
\hline \text { K. Rupert Murdoch } & \text { Chmn/CEO } & \text { News Corp. } & 75 & 4509 \\
\hline \text { Kenneth D. Lewis } & \text { Chmn/Pres/CEO } & \text { Bank of America } & 58 & 1500 \\
\hline \text { Kenneth I. Chenault } & \text { Chmn/CEO } & \text { American Express Co. } & 54 & 1092 \\
\hline \text { Louis C. Camilleri } & \text { Chmn/CEO } & \text { Altria Group } & 51 & 1663 \\
\hline \text { Mark V. Hurd } & \text { Chmn/Pres/CEO } & \text { Hewlett-Packard Co. } & 49 & 817 \\
\hline \text { Martin S. Sorrell } & \mathrm{CEO} & \text { WPP Group } & 61 & 1562 \\
\hline \text { Robert L. Nardelli } & \text { Chmn/Pres/CEO } & \text { Home Depot } & 57 & 2164 \\
\hline \text { Samuel J. Palmisano } & \text { Chmn/Pres/CEO } & \text { IBM Corp. } & 55 & 1680 \\
\hline \text { David C. Novak } & \text { Chmn/Pres/CEO } & \text { Yum Brands } & 53 & 1173 \\
\hline \text { Henry R. Silverman } & \text { Chmn/CEO } & \text { Cendant Corp. } & 65 & 3300 \\
\hline \text { Robert C. Wright } & \text { Chmn/CEO } & \text { NBC Universal } & 62 & 2500 \\
\hline \text { Sumner Redstone } & \text { Exec Chmn/Founder } & \text { Viacom } & 82 & 5807 \\
\hline
\end{array}
$$
a. Develop a scatter diagram for these data with the age of the executive as the independent variable.
b. What does the scatter diagram developed in part (a) indicate about the relationship between the two variables?
c. Develop the least squares estimated regression equation.
d. Suppose Bill Gustin is the 72-year-old chairman, president, and CEO of a major electronics company. Predict the annual salary for Bill Gustin.

James Kiss
James Kiss
Numerade Educator
02:22

Problem 11

Sporty cars are designed to provide better handling, acceleration, and a more responsive driving experience than a typical sedan. But, even within this select group of cars, performance as well as price can vary. Consumer Reports provided road-test scores and prices for the following 12 sporty cars (Consumer Reports website, October 2008). Prices are in thousands of dollars and road-test scores are based on a $0-100$ rating scale, with higher values indicating better performance.
$$
\begin{array}{lcc}
\text { Car } & \text { Price (\$1000s) } & \text { Road-Test Score } \\
\text { Chevrolet Cobalt SS } & 24.5 & 78 \\
\text { Dodge Caliber SRT4 } & 24.9 & 56 \\
\text { Ford Mustang GT (V8) } & 29.0 & 73 \\
\text { Honda Civic Si } & 21.7 & 78 \\
\text { Mazda RX-8 } & 31.3 & 86 \\
\text { Mini Cooper S } & 26.4 & 74 \\
\text { Mitsubishi Lancer Evolution GSR } & 38.1 & 83 \\
\text { Nissan Sentra SE-R Spec V } & 23.3 & 66 \\
\text { Suburu Impreza WRX } & 25.2 & 81 \\
\text { Suburu Impreza WRX Sti } & 37.6 & 89 \\
\text { Volkswagen GTI } & 24.0 & 83 \\
\text { Volkswagen R32 } & 33.6 & 83
\end{array}
$$
a. Develop a scatter diagram with price as the independent variable.
b. What does the scatter diagram developed in part (a) indicate about the relationship between the two variables?
c. Use the least squares method to develop the estimated regression equation.
d. Provide an interpretation for the slope of the estimated regression equation.
e. Another sporty car that Consumer Reports tested is the BMW 135i; the price for this car was $$\$ 36,700$$. Predict the road-test score for the BMW $135 \mathrm{i}$ using the estimated regression equation developed in part (c).

Adriano Chikande
Adriano Chikande
Numerade Educator
02:26

Problem 12

A personal watercraft (PWC) is a vessel propelled by water jets, designed to be operated by a person sitting, standing, or kneeling on the vessel. In the early 1970s, Kawasaki Motors Corp. U.S.A. introduced the JET SKI ${ }^{\circledR}$ watercraft, the first commercially successful PWC. Today, jet ski is commonly used as a generic term for personal watercraft. The following data show the weight (rounded to the nearest $10 \mathrm{lbs}$.) and the price (rounded to the nearest $$\$ 50$$ ) for 10 three-seater personal watercraft (Jetski News website, 2006).
$$
\begin{array}{lcr}
\text { Make and Model } & \text { Weight (lbs.) } & \text { Price (\$) } \\
\text { Honda AquaTrax F-12 } & 750 & 9500 \\
\text { Honda AquaTrax F-12X } & 790 & 10500 \\
\text { Honda AquaTrax F-12X GPScape } & 800 & 11200 \\
\text { Kawasaki STX-12F Jetski } & 740 & 8500 \\
\text { Yamaha FX Cruiser Waverunner } & 830 & 10000 \\
\text { Yamaha FX High Output Waverunner } & 770 & 10000 \\
\text { Yamaha FX Waverunner } & 830 & 9300 \\
\text { Yamaha VX110 Deluxe Waverunner } & 720 & 7700 \\
\text { Yamaha VX110 Sport Waverunner } & 720 & 7000 \\
\text { Yamaha XLT1200 Waverunner } & 780 & 8500
\end{array}
$$
a. Develop a scatter diagram for these data with weight as the independent variable.
b. What does the scatter diagram developed in part (a) indicate about the relationship between weight and price?
c. Use the least squares method to develop the estimated regression equation.
d. Predict the price for a three-seater PWC with a weight of 750 pounds.
e. The Honda AquaTrax F-12 weighs 750 pounds and has a price of $$\$ 9500$$. Shouldn't the predicted price you developed in part (d) for a PWC with a weight of 750 pounds also be $$\$ 9500$$ ?
f. The Kawasaki SX-R 800 Jetski has a seating capacity of one and weighs 350 pounds. Do you think the estimated regression equation developed in part (c) should be used to predict the price for this model?

Adriano Chikande
Adriano Chikande
Numerade Educator
13:26

Problem 13

To the Internal Revenue Service, the reasonableness of total itemized deductions depends on the taxpayer's adjusted gross income. Large deductions, which include charity and medical deductions, are more reasonable for taxpayers with large adjusted gross incomes. If a taxpayer claims larger than average itemized deductions for a given level of income, the chances of an IRS audit are increased. Data (in thousands of dollars) on adjusted gross income and the average or reasonable amount of itemized deductions follow.
$$
\begin{array}{cc}
\text { Adjusted Gross Income (\$1000s) } & \begin{array}{c}
\text { Reasonable Amount of } \\
\text { Itemized Deductions (\$1000s) }
\end{array} \\
22 & 9.6 \\
27 & 9.6 \\
32 & 10.1 \\
48 & 11.1 \\
65 & 13.5 \\
85 & 17.7 \\
120 & 25.5
\end{array}
$$
a. Develop a scatter diagram for these data with adjusted gross income as the independent variable.
b. Use the least squares method to develop the estimated regression equation.
c. Estimate a reasonable level of total itemized deductions for a taxpayer with an adjusted gross income of $$\$ 52,500$$. If this taxpayer claimed itemized deductions of $$\$ 20,400$$, would the IRS agent's request for an audit appear justified? Explain.

AR
Aaron Russell
Numerade Educator
05:15

Problem 14

PCWorld rated four component characteristics for 10 ultraportable laptop computers: features, performance, design, and price. Each characteristic was rated using a $0-100$ point scale. An overall rating, referred to as the $P C W$ World Rating, was then developed for each laptop. The following table shows the features rating and the $P C W$ World Rating for the 10 laptop computers (PC World website, February 5, 2009).
$$
\begin{array}{lcc}
\text { Model } & \begin{array}{c}
\text { Features } \\
\text { Rating }
\end{array} & \begin{array}{c}
\text { PCW World } \\
\text { Rating }
\end{array} \\
\text { Thinkpad X200 } & 87 & 83 \\
\text { VGN-Z598U } & 85 & 82 \\
\text { U6V } & 80 & 81 \\
\text { Elitebook 2530P } & 75 & 78 \\
\text { X360 } & 80 & 78 \\
\text { Thinkpad X300 } & 76 & 78 \\
\text { Ideapad U110 } & 81 & 77 \\
\text { Micro Express JFT2500 } & 73 & 75 \\
\text { Toughbook W7 } & 79 & 73 \\
\text { HP Voodoo Envy133 } & 68 & 72
\end{array}
$$
a. Develop a scatter diagram with the features rating as the independent variable.
b. What does the scatter diagram developed in part (a) indicate about the relationship between the two variables?
c. Use the least squares method to develop the estimated regression equation.
d. Estimate the $P C W$ World Rating for a new laptop computer that has a features rating of 70 .

Robin Corrigan
Robin Corrigan
Numerade Educator
01:41

Problem 15

The data from exercise 1 follow.
$$
\begin{array}{r|rrrrr}
\boldsymbol{x}_{\boldsymbol{i}} & 1 & 2 & 3 & 4 & 5 \\
\hline \boldsymbol{y}_{\boldsymbol{i}} & 3 & 7 & 5 & 11 & 14
\end{array}
$$
The estimated regression equation for these data is $\hat{y}=.20+2.60 x$.
a. Compute SSE, SST, and SSR using equations (14.8), (14.9), and (14.10).
b. Compute the coefficient of determination $r^2$. Comment on the goodness of fit.
c. Compute the sample correlation coefficient.

Adriano Chikande
Adriano Chikande
Numerade Educator
05:43

Problem 16

The data from exercise 2 follow.
$$
\begin{array}{r|rrrrr}
\boldsymbol{x}_{\boldsymbol{i}} & 3 & 12 & 6 & 20 & 14 \\
\hline \boldsymbol{y}_{\boldsymbol{i}} & 55 & 40 & 55 & 10 & 15
\end{array}
$$
The estimated regression equation for these data is $\hat{y}=68-3 x$.
a. Compute SSE, SST, and SSR.
b. Compute the coefficient of determination $r^2$. Comment on the goodness of fit.
c. Compute the sample correlation coefficient.

Srikar Katta
Srikar Katta
Numerade Educator
01:27

Problem 17

The data from exercise 3 follow.
$$
\begin{array}{r|rrrrr}
\boldsymbol{x}_{\boldsymbol{i}} & 2 & 6 & 9 & 13 & 20 \\
\hline \boldsymbol{y}_{\boldsymbol{i}} & 7 & 18 & 9 & 26 & 23
\end{array}
$$
The estimated regression equation for these data is $\hat{y}=7.6+.9 x$. What percentage of the total sum of squares can be accounted for by the estimated regression equation? What is the value of the sample correlation coefficient?

Adriano Chikande
Adriano Chikande
Numerade Educator
01:27

Problem 18

The following data are the monthly salaries $y$ and the grade point averages $x$ for students who obtained a bachelor's degree in business administration with a major in information systems. The estimated regression equation for these data is $\hat{y}=1790.5+581.1 x$.
$$
\begin{array}{cc}
\text { GPA } & \text { Monthly Salary (\$) } \\
2.6 & 3300 \\
3.4 & 3600 \\
3.6 & 4000 \\
3.2 & 3500 \\
3.5 & 3900 \\
2.9 & 3600
\end{array}
$$
a. Compute SST, SSR, and SSE.
b. Compute the coefficient of determination $r^2$. Comment on the goodness of fit.
c. What is the value of the sample correlation coefficient?

Adriano Chikande
Adriano Chikande
Numerade Educator
01:31

Problem 19

In exercise 7 a sales manager collected the following data on $x=$ annual sales and $y=$ years of experience. The estimated regression equation for these data is $\hat{y}=80+4 x$.
$$
\begin{array}{ccc}
\text { Salesperson } & \begin{array}{c}
\text { Years of } \\
\text { Experience }
\end{array} & \begin{array}{c}
\text { Annual } \\
\text { Sales } \\
\mathbf{( \$ 1 0 0 0 s )}
\end{array} \\
1 & 1 & 80 \\
2 & 3 & 97 \\
3 & 4 & 92 \\
4 & 4 & 102 \\
5 & 6 & 103 \\
6 & 8 & 111 \\
7 & 10 & 119 \\
8 & 10 & 123 \\
9 & 11 & 117 \\
10 & 13 & 136
\end{array}
$$
a. Compute SST, SSR, and SSE.
b. Compute the coefficient of determination $r^2$. Comment on the goodness of fit.
c. What is the value of the sample correlation coefficient?

Adriano Chikande
Adriano Chikande
Numerade Educator
02:51

Problem 20

Consumer Reports provided extensive testing and ratings for more than $100 \mathrm{HDTVs}$. An overall score, based primarily on picture quality, was developed for each model. In general, a higher overall score indicates better performance. The following data show the price and overall score for the ten 42-inch plasma televisions (Consumer Reports, March 2006).
$$
\begin{array}{lcc}
\text { Brand } & \text { Price } & \text { Score } \\
\text { Dell } & 2800 & 62 \\
\text { Hisense } & 2800 & 53 \\
\text { Hitachi } & 2700 & 44 \\
\text { JVC } & 3500 & 50 \\
\text { LG } & 3300 & 54 \\
\text { Maxent } & 2000 & 39 \\
\text { Panasonic } & 4000 & 66 \\
\text { Phillips } & 3000 & 55 \\
\text { Proview } & 2500 & 34 \\
\text { Samsung } & 3000 & 39
\end{array}
$$
a. Use these data to develop an estimated regression equation that could be used to estimate the overall score for a 42-inch plasma television given the price.
b. Compute $r^2$. Did the estimated regression equation provide a good fit?
c. Estimate the overall score for a 42-inch plasma television with a price of $$\$ 3200$$.

Adriano Chikande
Adriano Chikande
Numerade Educator
06:25

Problem 21

An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation.
$$
\begin{array}{cc}
\text { Production Volume (units) } & \text { Total Cost (\$) } \\
400 & 4000 \\
450 & 5000 \\
550 & 5400 \\
600 & 5900 \\
700 & 6400 \\
750 & 7000
\end{array}
$$
a. Use these data to develop an estimated regression equation that could be used to predict the total cost for a given production volume.
b. What is the variable cost per unit produced?
c. Compute the coefficient of determination. What percentage of the variation in total cost can be explained by production volume?
d. The company's production schedule shows 500 units must be produced next month. What is the estimated total cost for this operation?

Gus Steppen
Gus Steppen
Numerade Educator
01:39

Problem 22

Refer to exercise 5 where the following data were used to investigate whether higher prices are generally associated with higher ratings for elliptical trainers (Consumer Reports, February 2008).
$$
\begin{array}{lcc}
\text { Brand and Model } & \text { Price (\$) } & \text { Rating } \\
\text { Precor 5.31 } & 3700 & 87 \\
\text { Keys Fitness CG2 } & 2500 & 84 \\
\text { Octane Fitness Q37e } & 2800 & 82 \\
\text { LifeFitness X1 Basic } & 1900 & 74 \\
\text { NordicTrack AudioStrider 990 } & 1000 & 73 \\
\text { Schwinn 430 } & 800 & 69 \\
\text { Vision Fitness X6100 } & 1700 & 68 \\
\text { ProForm XP 520 Razor } & 600 & 55
\end{array}
$$
With $x=$ price$$ (\$) $$ and $y=$ rating, the estimated regression equation is $\hat{y}=$ $58.158+.008449 x$. For these data, SSE $=173.88$.
a. Compute the coefficient of determination $r^2$.
b. Did the estimated regression equation provide a good fit? Explain.
c. What is the value of the sample correlation coefficient? Does it reflect a strong or weak relationship between price and rating?

Adriano Chikande
Adriano Chikande
Numerade Educator
01:59

Problem 23

The data from exercise 1 follow.
$$
\begin{array}{r|rrrrr}
\boldsymbol{x}_{\boldsymbol{i}} & 1 & 2 & 3 & 4 & 5 \\
\hline \boldsymbol{y}_{\boldsymbol{i}} & 3 & 7 & 5 & 11 & 14
\end{array}
$$
a. Compute the mean square error using equation (14.15).
b. Compute the standard error of the estimate using equation (14.16).
c. Compute the estimated standard deviation of $b_1$ using equation (14.18).
d. Use the $t$ test to test the following hypotheses $(\alpha=.05)$ :
$$
\begin{aligned}
& H_0: \beta_1=0 \\
& H_{\mathrm{a}}: \beta_1 \neq 0
\end{aligned}
$$
e. Use the $F$ test to test the hypotheses in part (d) at a .05 level of significance. Present the results in the analysis of variance table format.

Adriano Chikande
Adriano Chikande
Numerade Educator
View

Problem 24

The data from exercise 2 follow.
$$
\begin{array}{r|rrrrr}
\boldsymbol{x}_{\boldsymbol{i}} & 3 & 12 & 6 & 20 & 14 \\
\hline \boldsymbol{y}_{\boldsymbol{i}} & 55 & 40 & 55 & 10 & 15
\end{array}
$$
a. Compute the mean square error using equation (14.15).
b. Compute the standard error of the estimate using equation (14.16).
c. Compute the estimated standard deviation of $b_1$ using equation (14.18).
d. Use the $t$ test to test the following hypotheses $(\alpha=.05)$ :
$$
\begin{aligned}
& H_0: \beta_1=0 \\
& H_{\mathrm{a}}: \beta_1 \neq 0
\end{aligned}
$$
e. Use the $F$ test to test the hypotheses in part (d) at a .05 level of significance. Present the results in the analysis of variance table format.

Victor Salazar
Victor Salazar
Numerade Educator
View

Problem 25

The data from exercise 3 follow.
$$
\begin{array}{r|rrrrr}
\boldsymbol{x}_{\boldsymbol{i}} & 2 & 6 & 9 & 13 & 20 \\
\hline \boldsymbol{y}_{\boldsymbol{i}} & 7 & 18 & 9 & 26 & 23
\end{array}
$$
a. What is the value of the standard error of the estimate?
b. Test for a significant relationship by using the $t$ test. Use $\alpha=.05$.
c. Use the $F$ test to test for a significant relationship. Use $\alpha=.05$. What is your conclusion?

Victor Salazar
Victor Salazar
Numerade Educator
12:53

Problem 26

In exercise 18 the data on grade point average and monthly salary were as follows.
$$
\begin{array}{cccc}
\text { GPA } & \text { Monthly Salary (\$) } & \text { GPA } & \text { Monthly Salary (\$) } \\
2.6 & 3300 & 3.2 & 3500 \\
3.4 & 3600 & 3.5 & 3900 \\
3.6 & 4000 & 2.9 & 3600
\end{array}
$$
a. Does the $t$ test indicate a significant relationship between grade point average and monthly salary? What is your conclusion? Use $\alpha=.05$.
b. Test for a significant relationship using the $F$ test. What is your conclusion? Use $\alpha=.05$.
c. Show the ANOVA table.

Srikar Katta
Srikar Katta
Numerade Educator
02:17

Problem 27

Outside Magazine tested 10 different models of day hikers and backpacking boots. The following data show the upper support and price for each model tested. Upper support was measured using a rating from 1 to 5 , with a rating of 1 denoting average upper support and a rating of 5 denoting excellent upper support (Outside Magazine Buyer's Guide, 2001).
$$
\begin{array}{lcc}
\text { Manufacturer and Model } & \text { Upper Support } & \text { Price (\$) } \\
\text { Salomon Super Raid } & 2 & 120 \\
\text { Merrell Chameleon Prime } & 3 & 125 \\
\text { Teva Challenger } & 3 & 130 \\
\text { Vasque Fusion GTX } & 3 & 135 \\
\text { Boreal Maigmo } & 3 & 150 \\
\text { L.L. Bean GTX Super Guide } & 5 & 189 \\
\text { Lowa Kibo } & 5 & 190 \\
\text { Asolo AFX 520 GTX } & 4 & 195 \\
\text { Raichle Mt. Trail GTX } & 4 & 200 \\
\text { Scarpa Delta SL M3 } & 5 & 220
\end{array}
$$
a. Use these data to develop an estimated regression equation to estimate the price of a day hiker and backpacking boot given the upper support rating.
b. At the .05 level of significance, determine whether upper support and price are related.
c. Would you feel comfortable using the estimated regression equation developed in part (a) to estimate the price for a day hiker or backpacking boot given the upper support rating?
d. Estimate the price for a day hiker with an upper support rating of 4 .

Adriano Chikande
Adriano Chikande
Numerade Educator
01:59

Problem 28

In exercise 8 , data on $x=$ temperature rating $\left(\mathrm{F}^{\circ}\right)$ and $y=$ price$$ (\$) $$for 11 sleeping bags manufactured by Bergans of Norway provided the estimated regression equation $\hat{y}=$ $359.2668-5.2772 x$. At the .05 level of significance, test whether temperature rating and price are related. Show the ANOVA table. What is your conclusion?

Jameson Kuper
Jameson Kuper
Numerade Educator
View

Problem 29

Refer to exercise 21, where data on production volume and cost were used to develop an estimated regression equation relating production volume and cost for a particular manufacturing operation. Use $\alpha=.05$ to test whether the production volume is significantly related to the total cost. Show the ANOVA table. What is your conclusion?

Monique Whittaker
Monique Whittaker
Numerade Educator
01:19

Problem 30

Refer to excercise 5 where the following data were used to investigate whether higher prices are generally associated with higher ratings for elliptical trainers (Consumer Reports, February 2008).
$$
\begin{array}{lcc}
\text { Brand and Model } & \text { Price (\$) } & \text { Rating } \\
\text { Precor 5.31 } & 3700 & 87 \\
\text { Keys Fitness CG2 } & 2500 & 84 \\
\text { Octane Fitness Q37e } & 2800 & 82 \\
\text { LifeFitness X1 Basic } & 1900 & 74 \\
\text { NordicTrack AudioStrider 990 } & 1000 & 73 \\
\text { Schwinn 430 } & 800 & 69 \\
\text { Vision Fitness X6100 } & 1700 & 68 \\
\text { ProForm XP 520 Razor } & 600 & 55
\end{array}
$$
With $x=$ price $$(\$)$$ and $y=$ rating, the estimated regression equation is $\hat{y}=58.158+$ $.008449 x$. For these data, SSE $=173.88$ and SST $=756$. Does the evidence indicate a significant relationship between price and rating?

Adriano Chikande
Adriano Chikande
Numerade Educator
01:30

Problem 31

In exercise 20, data on $x=$ price $$(\$)$$ and $y=$ overall score for ten 42 -inch plasma televisions tested by Consumer Reports provided the estimated regression equation $\hat{y}=12.0169+$ $.0127 x$. For these data SSE $=540.04$ and SST $=982.40$. Use the $F$ test to determine whether the price for a 42 -inch plasma television and the overall score are related at the .05 level of significance.

Adriano Chikande
Adriano Chikande
Numerade Educator
02:34

Problem 32

The data from exercise 1 follow.
$$
\begin{array}{r|rrrrr}
\boldsymbol{x}_{\boldsymbol{i}} & 1 & 2 & 3 & 4 & 5 \\
\hline \boldsymbol{y}_{\boldsymbol{i}} & 3 & 7 & 5 & 11 & 14
\end{array}
$$
a. Use equation (14.23) to estimate the standard deviation of $\hat{y}_{\mathrm{p}}$ when $x=4$.
b. Use expression (14.24) to develop a $95 \%$ confidence interval for the expected value of $y$ when $x=4$.
c. Use equation (14.26) to estimate the standard deviation of an individual value of $y$ when $x=4$.
d. Use expression (14.27) to develop a 95\% prediction interval for $y$ when $x=4$.

Adriano Chikande
Adriano Chikande
Numerade Educator
02:08

Problem 33

The data from exercise 2 follow.
$$
\begin{array}{r|rrrrr}
\boldsymbol{x}_{\boldsymbol{i}} & 3 & 12 & 6 & 20 & 14 \\
\hline \boldsymbol{y}_{\boldsymbol{i}} & 55 & 40 & 55 & 10 & 15
\end{array}
$$
a. Estimate the standard deviation of $\hat{y}_{\mathrm{p}}$ when $x=8$.
b. Develop a $95\%$ confidence interval for the expected value of $y$ when $x=8$.
c. Estimate the standard deviation of an individual value of $y$ when $x=8$.
d. Develop a $95\%$ prediction interval for $y$ when $x=8$.

Adriano Chikande
Adriano Chikande
Numerade Educator
11:23

Problem 34

The data from exercise 3 follow.
$$
\begin{array}{r|rrrrr}
\boldsymbol{x}_{\boldsymbol{i}} & 2 & 6 & 9 & 13 & 20 \\
\hline \boldsymbol{y}_{\boldsymbol{i}} & 7 & 18 & 9 & 26 & 23
\end{array}
$$
Develop the $95 \%$ confidence and prediction intervals when $x=12$. Explain why these two intervals are different.

Srikar Katta
Srikar Katta
Numerade Educator
02:05

Problem 35

In exercise 18, the data on grade point average $x$ and monthly salary $y$ provided the estimated regression equation $\hat{y}=1790.5+581.1 x$.
a. Develop a $95 \%$ confidence interval for the mean starting salary for all students with a 3.0 GPA.
b. Develop a $95 \%$ prediction interval for the starting salary for Joe Heller, a student with a GPA of 3.0.

Adriano Chikande
Adriano Chikande
Numerade Educator
02:40

Problem 36

In exercise 8 , data on $x=$ temperature rating $\left(\mathrm{F}^{\circ}\right)$ and $y=$ price $$(\$) $$for 11 sleeping bags manufactured by Bergans of Norway provided the estimated regression equation $\hat{y}=$ $359.2668-5.2772 x$. For these data $s=37.9372$.
a. Develop a point estimate of the price for a sleeping bag with a temperature rating of 30 .
b. Develop a $95 \%$ confidence interval for the mean overall temperature rating for all sleeping bags with a temperature rating of 30 .
c. Suppose that Bergans developed a new model with a temperature rating of 30 . Develop a $95 \%$ prediction interval for the price of this new model.
d. Discuss the differences in your answers to parts (b) and (c).

Adriano Chikande
Adriano Chikande
Numerade Educator
02:10

Problem 37

In exercise 13, data were given on the adjusted gross income $x$ and the amount of itemized deductions taken by taxpayers. Data were reported in thousands of dollars. With the estimated regression equation $\hat{y}=4.68+.16 x$, the point estimate of a reasonable level of total itemized deductions for a taxpayer with an adjusted gross income of $$\$ 52,500$$ is $$\$ 13,080$$.
a. Develop a $95 \%$ confidence interval for the mean amount of total itemized deductions for all taxpayers with an adjusted gross income of $$\$ 52,500$$.
b. Develop a $95 \%$ prediction interval estimate for the amount of total itemized deductions for a particular taxpayer with an adjusted gross income of $$\$ 52,500$$.
c. If the particular taxpayer referred to in part (b) claimed total itemized deductions of $$\$ 20,400$$, would the IRS agent's request for an audit appear to be justified?
d. Use your answer to part (b) to give the IRS agent a guideline as to the amount of total itemized deductions a taxpayer with an adjusted gross income of $$\$ 52,500$$ should claim before an audit is recommended.

Adriano Chikande
Adriano Chikande
Numerade Educator
01:58

Problem 38

Refer to Exercise 21, where data on the production volume $x$ and total cost $y$ for a particular manufacturing operation were used to develop the estimated regression equation $\hat{y}=$ $1246.67+7.6 x$.
a. The company's production schedule shows that 500 units must be produced next month. What is the point estimate of the total cost for next month?
b. Develop a $99 \%$ prediction interval for the total cost for next month.
c. If an accounting cost report at the end of next month shows that the actual production cost during the month was $\$ 6000$, should managers be concerned about incurring such a high total cost for the month? Discuss.

Adriano Chikande
Adriano Chikande
Numerade Educator
03:15

Problem 39

Almost all U.S. light-rail systems use electric cars that run on tracks built at street level. The Federal Transit Administration claims light-rail is one of the safest modes of travel, with an accident rate of .99 accidents per million passenger miles as compared to 2.29 for buses. The following data show the miles of track and the weekday ridership in thousands of passengers for six light-rail systems (USA Today, January 7, 2003).
$$
\begin{array}{lcc}
\text { City } & \text { Miles of Track } & \text { Ridership (1000s) } \\
\text { Cleveland } & 15 & 15 \\
\text { Denver } & 17 & 35 \\
\text { Portland } & 38 & 81 \\
\text { Sacramento } & 21 & 31 \\
\text { San Diego } & 47 & 75 \\
\text { San Jose } & 31 & 30 \\
\text { St. Louis } & 34 & 42
\end{array}
$$
a. Use these data to develop an estimated regression equation that could be used to predict the ridership given the miles of track.
b. Did the estimated regression equation provide a good fit? Explain.
c. Develop a $95 \%$ confidence interval for the mean weekday ridership for all light-rail systems with 30 miles of track.
d. Suppose that Charlotte is considering construction of a light-rail system with 30 miles of track. Develop a $95\%$ prediction interval for the weekday ridership for the Charlotte system. Do you think that the prediction interval you developed would be of value to Charlotte planners in anticipating the number of weekday riders for their new lightrail system? Explain.

Adriano Chikande
Adriano Chikande
Numerade Educator
01:51

Problem 40

The commercial division of a real estate firm is conducting a regression analysis of the relationship between $x$, annual gross rents (in thousands of dollars), and $y$, selling price (in thousands of dollars) for apartment buildings. Data were collected on several properties recently sold and the following computer output was obtained.
The regression equation is
$$
\mathrm{Y}=20.0+7.21 \mathrm{X}
$$
$\begin{array}{lrrr}\text { Predictor } & \text { Coef } & \text { SE Coef } & \text { T } \\ \text { Constant } & 20.000 & 3.2213 & 6.21 \\ \text { X } & 7.210 & 1.3626 & 5.29\end{array}$
Analysis of Variance
$\begin{array}{lrr}\text { SOURCE } & \text { DF } & \text { SS } \\ \text { Regression } & 1 & 41587.3 \\ \text { Residual Error } & 7 & \\ \text { Total } & 8 & 51984.1\end{array}$
a. How many apartment buildings were in the sample?
b. Write the estimated regression equation.
c. What is the value of $s_{b_1}$ ?
d. Use the $F$ statistic to test the significance of the relationship at a .05 level of significance.
e. Estimate the selling price of an apartment building with gross annual rents of $\$ 50,000$.

Adriano Chikande
Adriano Chikande
Numerade Educator
01:46

Problem 41

Following is a portion of the computer output for a regression analysis relating $y=$ maintenance expense (dollars per month) to $x=$ usage (hours per week) of a particular brand of computer terminal.
The regression equation is
$$
Y=6.1092+.8951 \mathrm{X}
$$
$\begin{array}{lrr}\text { Predictor } & \text { Coef } & \text { SE Coef } \\ \text { Constant } & 6.1092 & 0.9361 \\ \text { X } & 0.8951 & 0.1490\end{array}$
Analysis of Variance
$\begin{array}{lrrr}\text { SOURCE } & \text { DF } & \text { SS } & \text { MS } \\ \text { Regression } & 1 & 1575.76 & 1575.76 \\ \text { Residual Error } & 8 & 349.14 & 43.64 \\ \text { Total } & 9 & 1924.90 & \end{array}$
a. Write the estimated regression equation.
b. Use a $t$ test to determine whether monthly maintenance expense is related to usage at the .05 level of significance.
c. Use the estimated regression equation to predict monthly maintenance expense for any terminal that is used 25 hours per week.

Adriano Chikande
Adriano Chikande
Numerade Educator
01:41

Problem 42

A regression model relating $x$, number of salespersons at a branch office, to $y$, annual sales at the office (in thousands of dollars) provided the following computer output from a regression analysis of the data.
$\begin{array}{lrrr}\text { The regression equation is } & \\ Y=80.0+50.00 \mathrm{X} & & \\ \text { Y } & & \\ \text { Predictor } & \text { Coef } & \text { SE Coef } & \mathrm{T} \\ \text { Constant } & 80.0 & 11.333 & 7.06 \\ X & 50.0 & 5.482 & 9.12 \\ \text { Analysis of Variance } & & \\ \text { SOURCE } & & & \text { MS } \\ \text { Regression } & 1 & 6828.6 & 6828.6 \\ \text { Residual Error } & 28 & 2298.8 & 82.1 \\ \text { Total } & 29 & 9127.4 & \end{array}$
a. Write the estimated regression equation.
b. How many branch offices were involved in the study?
c. Compute the $F$ statistic and test the significance of the relationship at a .05 level of significance.
d. Predict the annual sales at the Memphis branch office. This branch employs 12 salespersons.

Adriano Chikande
Adriano Chikande
Numerade Educator
01:45

Problem 43

Health experts recommend that runners drink 4 ounces of water every 15 minutes they run. Although handheld bottles work well for many types of runs, all-day cross-country runs require hip-mounted or over-the-shoulder hydration systems. In addition to carrying more water, hip-mounted or over-the-shoulder hydration systems offer more storage space for food and extra clothing. As the capacity increases, however, the weight and cost of these larger-capacity systems also increase. The following data show the weight (ounces) and the price for 26 hipmounted or over-the-shoulder hydration systems (Trail Runner Gear Guide, 2003).
$$
\begin{array}{lcc}
\text { Model } & \begin{array}{c}
\text { Weight } \\
\text { (oz.) }
\end{array} & \begin{array}{c}
\text { Price } \\
\text { (\$) }
\end{array} \\
\text { Fastdraw } & 3 & 10 \\
\text { Fastdraw Plus } & 4 & 12 \\
\text { Fitness } & 5 & 12 \\
\text { Access } & 7 & 20 \\
\text { Access Plus } & 8 & 25 \\
\text { Solo } & 9 & 25 \\
\text { Serenade } & 9 & 35 \\
\text { Solitaire } & 11 & 35 \\
\text { Gemini } & 21 & 45 \\
\text { Shadow } & 15 & 40 \\
\text { SipStream } & 18 & 60 \\
\text { Express } & 9 & 30 \\
\text { Lightning } & 12 & 40 \\
\text { Elite } & 14 & 60 \\
\text { Extender } & 16 & 65 \\
\text { Stinger } & 16 & 65 \\
\text { GelFlask Belt } & 3 & 20 \\
\text { GelDraw } & 1 & 7 \\
\text { GelFlask Clip-on Holster } & 2 & 10 \\
\text { GelFlask Holster SS } & 1 & 10 \\
\text { Strider (W) } & 8 & 30
\end{array}
$$
$$
\begin{array}{lcc}
\text { Model } & \begin{array}{c}
\text { Weight } \\
\text { (oz.) }
\end{array} & \begin{array}{c}
\text { Price } \\
\text { (\$) }
\end{array} \\
\text { Walkabout (W) } & 14 & 40 \\
\text { Solitude I.C.E. } & 9 & 35 \\
\text { Getaway I.C.E. } & 19 & 55 \\
\text { Profile I.C.E. } & 14 & 50 \\
\text { Traverse I.C.E. } & 13 & 60
\end{array}
$$
a. Use these data to develop an estimated regression equation that could be used to predict the price of a hydration system given its weight.
b. Test the significance of the relationship at the .05 level of significance.
c. Did the estimated regression equation provide a good fit? Explain.
d. Assume that the estimated regression equation developed in part (a) will also apply to hydration systems produced by other companies. Develop a $95 \%$ confidence interval estimate of the price for all hydration systems that weigh 10 ounces.
e. Assume that the estimated regression equation developed in part (a) will also apply to hydration systems produced by other companies. Develop a $95 \%$ prediction interval estimate of the price for the Back Draft system produced by Eastern Mountain Sports. The Back Draft system weighs 10 ounces.

Adriano Chikande
Adriano Chikande
Numerade Educator
03:55

Problem 44

Automobile racing, high-performance driving schools, and driver education programs run by automobile clubs continue to grow in popularity. All these activities require the participant to wear a helmet that is certified by the Snell Memorial Foundation, a not-for-profit organization dedicated to research, education, testing, and development of helmet safety standards. Snell "SA" (Sports Application) rated professional helmets are designed for auto racing and provide extreme impact resistance and high fire protection. One of the key factors in selecting a helmet is weight, since lower weight helmets tend to place less stress on the neck. The following data show the weight and price for $18 \mathrm{SA}$ helmets (SoloRacer website, April 20, 2008).
$$
\begin{array}{lcc}
\text { Helmet } & \text { Weight (oz) } & \text { Price (\$) } \\
\text { Pyrotect Pro Airflow } & 64 & 248 \\
\text { Pyrotect Pro Airflow Graphics } & 64 & 278 \\
\text { RCi Full Face } & 64 & 200 \\
\text { RaceQuip RidgeLine } & 64 & 200 \\
\text { HJC AR-10 } & 58 & 300 \\
\text { HJC Si-12 } & 47 & 700 \\
\text { HJC HX-10 } & 49 & 900 \\
\text { Impact Racing Super Sport } & 59 & 340 \\
\text { Zamp FSA-1 } & 66 & 199 \\
\text { Zamp RZ-2 } & 58 & 299 \\
\text { Zamp RZ-2 Ferrari } & 58 & 299 \\
\text { Zamp RZ-3 Sport } & 52 & 479 \\
\text { Zamp RZ-3 Sport Painted } & 52 & 479 \\
\text { Bell M2 } & 63 & 369 \\
\text { Bell M4 } & 62 & 369 \\
\text { Bell M4 Pro } & 54 & 559 \\
\text { G Force Pro Force 1 } & 63 & 250 \\
\text { G Force Pro Force 1 Grafx } & 63 & 280
\end{array}
$$
a. Develop a scatter diagram with weight as the independent variable.
b. Does there appear to be any relationship between these two variables?
c. Develop the estimated regression equation that could be used to predict the price given
the weight.
d. Test for the significance of the relationship at the .05 level of significance.
e. Did the estimated regression equation provide a good fit? Explain.

Jameson Kuper
Jameson Kuper
Numerade Educator
01:27

Problem 45

Given are data for two variables, x and y.
$$
\begin{array}{r|rrrrr}
\boldsymbol{x}_{\boldsymbol{i}} & 6 & 11 & 15 & 18 & 20 \\
\hline \boldsymbol{y}_{\boldsymbol{i}} & 6 & 8 & 12 & 20 & 30
\end{array}
$$
a. Develop an estimated regression equation for these data.
b. Compute the residuals.
c. Develop a plot of the residuals against the independent variable $x$. Do the assumptions about the error terms seem to be satisfied?
d. Compute the standardized residuals.
e. Develop a plot of the standardized residuals against $\hat{y}$. What conclusions can you draw from this plot?

Adriano Chikande
Adriano Chikande
Numerade Educator
01:27

Problem 46

The following data were used in a regression study.
$$
\begin{array}{crrcrr}
\text { Observation } & \boldsymbol{x}_{\boldsymbol{i}} & \boldsymbol{y}_{\boldsymbol{i}} & \text { Observation } & \boldsymbol{x}_{\boldsymbol{i}} & \boldsymbol{y}_{\boldsymbol{i}} \\
1 & 2 & 4 & 6 & 7 & 6 \\
2 & 3 & 5 & 7 & 7 & 9 \\
3 & 4 & 4 & 8 & 8 & 5 \\
4 & 5 & 6 & 9 & 9 & 11 \\
5 & 7 & 4 & & &
\end{array}
$$
a. Develop an estimated regression equation for these data.
b. Construct a plot of the residuals. Do the assumptions about the error term seem to
be satisfied?

Adriano Chikande
Adriano Chikande
Numerade Educator
01:08

Problem 47

Data on advertising expenditures and revenue (in thousands of dollars) for the Four Seasons Restaurant follow.
$$
\begin{array}{cc}
\text { Advertising Expenditures } & \text { Revenue } \\
1 & 19 \\
2 & 32 \\
4 & 44 \\
6 & 40 \\
10 & 52 \\
14 & 53 \\
20 & 54
\end{array}
$$
a. Let $x$ equal advertising expenditures and $y$ equal revenue. Use the method of least squares to develop a straight line approximation of the relationship between the two variables.
b. Test whether revenue and advertising expenditures are related at a .05 level of significance.
c. Prepare a residual plot of $y-\hat{y}$ versus $\hat{y}$. Use the result from part (a) to obtain the values of $\hat{y}$.
d. What conclusions can you draw from residual analysis? Should this model be used, or should we look for a better one?

Dominador Tan
Dominador Tan
Numerade Educator
02:27

Problem 48

Refer to exercise 7, where an estimated regression equation relating years of experience and annual sales was developed.
a. Compute the residuals and construct a residual plot for this problem.
b. Do the assumptions about the error terms seem reasonable in light of the residual plot?

Jameson Kuper
Jameson Kuper
Numerade Educator
02:24

Problem 49

Recent family home sales in San Antonio provided the following data (San Antonio Realty Watch website, November 2008).
$$
\begin{array}{cr}
\text { Square Footage } & \text { Price (\$) } \\
1580 & 142,500 \\
1572 & 145,000 \\
1352 & 115,000 \\
2224 & 155,900 \\
1556 & 95,000 \\
1435 & 128,000 \\
1438 & 100,000 \\
1089 & 55,000 \\
1941 & 142,000 \\
1698 & 115,000 \\
1539 & 115,000 \\
1364 & 105,000 \\
1979 & 155,000 \\
2183 & 132,000 \\
2096 & 140,000 \\
1400 & 85,000 \\
2372 & 145,000 \\
1752 & 155,000 \\
1386 & 80,000 \\
1163 & 100,000
\end{array}
$$
a. Develop the estimated regression equation that can be used to predict the sales prices
given the square footage.
b. Construct a residual plot of the standardized residuals against the independent variable.
c. Do the assumptions about the error term and model form seem reasonable in light of
the residual plot?

Adriano Chikande
Adriano Chikande
Numerade Educator
01:39

Problem 50

Consider the following data for two variables, x and y.
$$
\begin{array}{l|lllllll}
\boldsymbol{x}_{\boldsymbol{i}} & 135 & 110 & 130 & 145 & 175 & 160 & 120 \\
\hline \boldsymbol{y}_{\boldsymbol{i}} & 145 & 100 & 120 & 120 & 130 & 130 & 110
\end{array}
$$
a. Compute the standardized residuals for these data. Do the data include any outliers? Explain.
b. Plot the standardized residuals against $\hat{y}$. Does this plot reveal any outliers?
c. Develop a scatter diagram for these data. Does the scatter diagram indicate any outliers in the data? In general, what implications does this finding have for simple linear regression?

Adriano Chikande
Adriano Chikande
Numerade Educator
01:59

Problem 51

Consider the following data for two variables, $x$ and $y$.
$$
\begin{array}{r|rrrrrrrr}
\boldsymbol{x}_{\boldsymbol{i}} & 4 & 5 & 7 & 8 & 10 & 12 & 12 & 22 \\
\hline \boldsymbol{y}_{\boldsymbol{i}} & 12 & 14 & 16 & 15 & 18 & 20 & 24 & 19
\end{array}
$$
a. Compute the standardized residuals for these data. Do the data include any outliers? Explain.
b. Compute the leverage values for these data. Do there appear to be any influential observations in these data? Explain.
c. Develop a scatter diagram for these data. Does the scatter diagram indicate any influential observations? Explain.

Adriano Chikande
Adriano Chikande
Numerade Educator
02:36

Problem 52

The following data show the media expenditures $$(\$ millions)$$ and the shipments in bbls. (millions) for 10 major brands of beer.
$$
\begin{array}{lcc}
\text { Brand } & \begin{array}{c}
\text { Media Expenditures } \\
\text { (\$ millions) }
\end{array} & \text { Shipments } \\
\text { Budweiser } & 120.0 & 36.3 \\
\text { Bud Light } & 68.7 & 20.7 \\
\text { Miller Lite } & 100.1 & 15.9 \\
\text { Coors Light } & 76.6 & 13.2 \\
\text { Busch } & 8.7 & 8.1 \\
\text { Natural Light } & 0.1 & 7.1 \\
\text { Miller Genuine Draft } & 21.5 & 5.6 \\
\text { Miller High Life } & 1.4 & 4.4 \\
\text { Busch Light } & 5.3 & 4.3 \\
\text { Milwaukee's Best } & 1.7 & 4.3
\end{array}
$$
a. Develop the estimated regression equation for these data.
b. Use residual analysis to determine whether any outliers and/or influential observations are present. Briefly summarize your findings and conclusions.

Adriano Chikande
Adriano Chikande
Numerade Educator
01:45

Problem 53

Health experts recommend that runners drink 4 ounces of water every 15 minutes they run. Runners who run three to eight hours need a larger-capacity hip-mounted or over-theshoulder hydration system. The following data show the liquid volume $(\mathrm{fl} \mathrm{oz})$ and the price for 26 Ultimate Direction hip-mounted or over-the-shoulder hydration systems (Trail Runner Gear Guide, 2003).
$$
\begin{array}{lcc}
\text { Model } & \begin{array}{c}
\text { Volume } \\
\text { (fl } \mathbf{~ o z})
\end{array} & \begin{array}{c}
\text { Price } \\
\text { (\$) }
\end{array} \\
\text { Fastdraw } & 20 & 10 \\
\text { Fastdraw Plus } & 20 & 12 \\
\text { Fitness } & 20 & 12 \\
\text { Access } & 20 & 20 \\
\text { Access Plus } & 24 & 25 \\
\text { Solo } & 20 & 25 \\
\text { Serenade } & 20 & 35 \\
\text { Solitaire } & 20 & 35 \\
\text { Gemini } & 40 & 45 \\
\text { Shadow } & 64 & 40 \\
\text { SipStream } & 96 & 60 \\
\text { Express } & 20 & 30 \\
\text { Lightning } & 28 & 40 \\
\text { Elite } & 40 & 60 \\
\text { Extender } & 40 & 65 \\
\text { Stinger } & 32 & 65 \\
\text { GelFlask Belt } & 4 & 20 \\
\text { GelDraw } & 4 & 7 \\
\text { GelFlask Clip-on Holster } & 4 & 10 \\
\text { GelFlask Holster SS } & 4 & 10 \\
\text { Strider (W) } & 20 & 30 \\
\text { Walkabout (W) } & 230 & 40 \\
\text { Solitude I.C.E. } & 20 & 35 \\
\text { Getaway I.C.E. } & 40 & 55 \\
\text { Profile I.C.E. } & 64 & 50 \\
\text { Traverse I.C.E. } & 64 & 60
\end{array}
$$
a. Develop the estimated regression equation that can be used to predict the price of a hydration system given its liquid volume.
b. Use residual analysis to determine whether any outliers or influential observations are present. Briefly summarize your findings and conclusions.

Adriano Chikande
Adriano Chikande
Numerade Educator
View

Problem 55

The following data show the annual revenue $$(\$ $$ millions) and the estimated team value $$(\$ $$millions) for the 32 teams in the National Football League (Forbes website, February 2009).
$$
\begin{array}{|c|c|c|}
\hline \text { Team } & \text { Revenue (\$ millions) } & \text { Value (\$ millions) } \\
\hline \text { Arizona Cardinals } & 203 & 914 \\
\hline \text { Atlanta Falcons } & 203 & 872 \\
\hline \text { Baltimore Ravens } & 226 & 1062 \\
\hline \text { Buffalo Bills } & 206 & 885 \\
\hline \text { Carolina Panthers } & 221 & 1040 \\
\hline \text { Chicago Bears } & 226 & 1064 \\
\hline \text { Cincinnati Bengals } & 205 & 941 \\
\hline \text { Cleveland Browns } & 220 & 1035 \\
\hline \text { Dallas Cowboys } & 269 & 1612 \\
\hline \text { Denver Broncos } & 226 & 1061 \\
\hline \text { Detroit Lions } & 204 & 917 \\
\hline \text { Green Bay Packers } & 218 & 1023 \\
\hline \text { Houston Texans } & 239 & 1125 \\
\hline \text { Indianapolis Colts } & 203 & 1076 \\
\hline \text { Jacksonville Jaguars } & 204 & 876 \\
\hline \text { Kansas City Chiefs } & 214 & 1016 \\
\hline \text { Miami Dolphins } & 232 & 1044 \\
\hline \text { Minnesota Vikings } & 195 & 839 \\
\hline \text { New England Patriots } & 282 & 1324 \\
\hline \text { New Orleans Saints } & 213 & 937 \\
\hline \text { New York Giants } & 214 & 1178 \\
\hline \text { New York Jets } & 213 & 1170 \\
\hline \text { Oakland Raiders } & 205 & 861 \\
\hline \text { Philadelphia Eagles } & 237 & 1116 \\
\hline \text { Pittsburgh Steelers } & 216 & 1015 \\
\hline \text { San Diego Chargers } & 207 & 888 \\
\hline \text { San Francisco 49ers } & 201 & 865 \\
\hline \text { Seattle Seahawks } & 215 & 1010 \\
\hline \text { St. Louis Rams } & 206 & 929 \\
\hline \text { Tampa Bay Buccaneers } & 224 & 1053 \\
\hline \text { Tennessee Titans } & 216 & 994 \\
\hline \text { Washington Redskins } & 327 & 1538 \\
\hline
\end{array}
$$
a. Develop a scatter diagram with Revenue on the horizontal axis and Value on the vertical axis. Looking at the scatter diagram, does it appear that there are any outliers and/or influential observations in the data?
b. Develop the estimated regression equation that can be used to predict team value given the value of annual revenue.
c. Use residual analysis to determine whether any outliers and/or influential observations are present. Briefly summarize your findings and conclusions.

Victor Salazar
Victor Salazar
Numerade Educator
02:17

Problem 55

Does a high value of $r^2$ imply that two variables are causally related? Explain.

Adriano Chikande
Adriano Chikande
Numerade Educator
01:57

Problem 56

In your own words, explain the difference between an interval estimate of the mean value of $y$ for a given $x$ and an interval estimate for an individual value of $y$ for a given $x$.

Adriano Chikande
Adriano Chikande
Numerade Educator
01:30

Problem 57

What is the purpose of testing whether $\beta_1=0$ ? If we reject $\beta_1=0$, does it imply a good fit?

Adriano Chikande
Adriano Chikande
Numerade Educator
01:19

Problem 58

The data in the following table show the number of shares selling (millions) and the expected price (average of projected low price and projected high price) for 10 selected initial public stock offerings.
$$
\begin{array}{lcc}
\text { Company } & \begin{array}{c}
\text { Shares } \\
\text { Selling (millions) }
\end{array} & \begin{array}{c}
\text { Expected } \\
\text { Price (\$) }
\end{array} \\
\text { American Physician } & 5.0 & 15 \\
\text { Apex Silver Mines } & 9.0 & 14 \\
\text { Dan River } & 6.7 & 15 \\
\text { Franchise Mortgage } & 8.75 & 17 \\
\text { Gene Logic } & 3.0 & 11 \\
\text { International Home Foods } & 13.6 & 19 \\
\text { PRT Group } & 4.6 & 13 \\
\text { Rayovac } & 6.7 & 14 \\
\text { RealNetworks } & 3.0 & 10 \\
\text { Software AG Systems } & 7.7 & 13
\end{array}
$$
a. Develop an estimated regression equation with the number of shares selling as the independent variable and the expected price as the dependent variable.
b. At the .05 level of significance, is there a significant relationship between the two variables?
c. Did the estimated regression equation provide a good fit? Explain.
d. Use the estimated regression equation to estimate the expected price for a firm considering an initial public offering of 6 million shares.

Adriano Chikande
Adriano Chikande
Numerade Educator
04:00

Problem 59

The following data show Morningstar's Fair Value estimate and the Share Price for 28 companies. Fair Value is an estimate of a company's value per share that takes into account estimates of the company's growth, profitability, riskiness, and other factors over the next five years (Morningstar Stocks 500, 2008 edition).
$$
\begin{array}{lcc}
\text { Company } & \text { Fair Value (\$) } & \text { Share Price (\$) } \\
\text { Air Products and Chemicals } & 80 & 98.63 \\
\text { Allied Waste Industries } & 17 & 11.02 \\
\text { America Mobile } & 83 & 61.39 \\
\text { AT\&T } & 35 & 41.56 \\
\text { Bank of America } & 70 & 41.26 \\
\text { Barclays PLC } & 68 & 40.37 \\
\text { Citigroup } & 53 & 29.44 \\
\text { Costco Wholesale Corp. } & 75 & 69.76 \\
\text { Covidien, Ltd. } & 58 & 44.29 \\
\text { Darden Restaurants } & 52 & 27.71 \\
\text { Dun \& Bradstreet } & 87 & 88.63 \\
\text { Equifax } & 42 & 36.36 \\
\text { Gannett Co. } & 38 & 39.00 \\
\text { Genuine Parts } & 48 & 46.30 \\
\text { GlaxoSmithKline PLC } & 57 & 50.39 \\
\text { Iron Mountain } & 33 & 37.02 \\
\text { ITT Corporation } & 83 & 66.04 \\
\text { Johnson \& Johnson } & 80 & 66.70 \\
\text { Las Vegas Sands } & 98 & 103.05 \\
\text { Macrovision } & 23 & 18.33 \\
\text { Marriott International } & 39 & 34.18 \\
\text { Nalco Holding Company } & 29 & 24.18 \\
\text { National Interstate } & 25 & 33.10 \\
\text { Portugal Telecom } & 15 & 13.02 \\
\text { Qualcomm } & 48 & 39.35 \\
\text { Royal Dutch Shell Ltd. } & 87 & 84.20 \\
\text { SanDisk } & 60 & 33.17 \\
\text { Time Warner } & 42 & 27.60
\end{array}
$$
a. Develop the estimated regression equation that could be used to estimate the Share Price given the Fair Value.
b. At the .05 level of significance, is there a significant relationship between the two variables?
c. Use the estimated regression equation to estimate the Share Price for a company that has a Fair Value of $$\$ 50$$.
d. Do you believe the estimated regression equation would provide a good prediction of the share price? Use $r^2$ to support your answer.

Jameson Kuper
Jameson Kuper
Numerade Educator
06:45

Problem 60

One of the biggest changes in higher education in recent years has been the growth of online universities. The Online Education Database is an independent organization whose mission is to build a comprehensive list of the top accredited online colleges. The following table shows the retention rate $(\%)$ and the graduation rate (\%) for 29 online colleges (Online Education Database website, January 2009).
$$
\begin{array}{lcc}
\text { College } & \begin{array}{c}
\text { Retention } \\
\text { Rate (\%) }
\end{array} & \begin{array}{c}
\text { Graduation } \\
\text { Rate (\%) }
\end{array} \\
\text { Western International University } & 7 & 25 \\
\text { South University } & 51 & 25 \\
\text { University of Phoenix } & 4 & 28 \\
\text { American InterContinental University } & 29 & 32 \\
\text { Franklin University } & 33 & 33 \\
\text { Devry University } & 47 & 33
\end{array}
$$
$$
\begin{array}{lcc}
\text { College } & \begin{array}{c}
\text { Retention } \\
\text { Rate (\%) }
\end{array} & \begin{array}{c}
\text { Graduation } \\
\text { Rate }(\%)
\end{array} \\
\text { Tiffin University } & 63 & 34 \\
\text { Post University } & 45 & 36 \\
\text { Peirce College } & 60 & 36 \\
\text { Everest University } & 62 & 36 \\
\text { Upper Iowa University } & 67 & 36 \\
\text { Dickinson State University } & 65 & 37 \\
\text { Western Governors University } & 78 & 37 \\
\text { Kaplan University } & 75 & 38 \\
\text { Salem International University } & 54 & 39 \\
\text { Ashford University } & 45 & 41 \\
\text { ITT Technical Institute } & 38 & 44 \\
\text { Berkeley College } & 51 & 45 \\
\text { Grand Canyon University } & 69 & 46 \\
\text { Nova Southeastern University } & 60 & 47 \\
\text { Westwood College } & 37 & 48 \\
\text { Everglades University } & 63 & 50 \\
\text { Liberty University } & 73 & 51 \\
\text { LeTourneau University } & 78 & 52 \\
\text { Rasmussen College } & 48 & 53 \\
\text { Keiser University } & 95 & 55 \\
\text { Herzing College } & 68 & 56 \\
\text { National University } & 100 & 57 \\
\text { Florida National College } & 100 & 61
\end{array}
$$
a. Develop a scatter diagram with retention rate as the independent variable. What does the scatter diagram indicate about the relationship between the two variables?
b. Develop the estimated regression equation.
c. Test for a significant relationship. Use $\alpha=.05$.
d. Did the estimated regression equation provide a good fit?
e. Suppose you were the president of South University. After reviewing the results, would you have any concerns about the performance of your university as compared to other online universities?
f. Suppose you were the president of the University of Phoenix. After reviewing the results, would you have any concerns about the performance of your university as compared to other online universities?

Jameson Kuper
Jameson Kuper
Numerade Educator
02:08

Problem 61

Jensen Tire & Auto is in the process of deciding whether to purchase a maintenance contract for its new computer wheel alignment and balancing machine. Managers feel that maintenance expense should be related to usage, and they collected the following information on weekly usage (hours) and annual maintenance expense (in hundreds of dollars).
$$
\begin{array}{cc}
\begin{array}{c}
\text { Weekly Usage } \\
\text { (hours) }
\end{array} & \begin{array}{c}
\text { Annual } \\
\text { Maintenance Expense }
\end{array} \\
13 & 17.0 \\
10 & 22.0 \\
20 & 30.0 \\
28 & 37.0 \\
32 & 47.0 \\
17 & 30.5 \\
24 & 32.5 \\
31 & 39.0 \\
40 & 51.5 \\
38 & 40.0
\end{array}
$$
a. Develop the estimated regression equation that relates annual maintenance expense to weekly usage.
b. Test the significance of the relationship in part (a) at a .05 level of significance.
c. Jensen expects to use the new machine 30 hours per week. Develop a $95 \%$ prediction interval for the company's annual maintenance expense.
d. If the maintenance contract costs $$\$ 3000$$ per year, would you recommend purchasing it? Why or why not?

Adriano Chikande
Adriano Chikande
Numerade Educator
01:51

Problem 62

In a manufacturing process the assembly line speed (feet per minute) was thought to affect the number of defective parts found during the inspection process. To test this theory, managers devised a situation in which the same batch of parts was inspected visually at a variety of line speeds. They collected the following data.
$$
\begin{array}{cc}
\text { Line Speed } & \begin{array}{c}
\text { Number of Defective } \\
\text { Parts Found }
\end{array} \\
20 & 21 \\
20 & 19 \\
40 & 15 \\
30 & 16 \\
60 & 14 \\
40 & 17
\end{array}
$$
a. Develop the estimated regression equation that relates line speed to the number of defective parts found.
b. At a .05 level of significance, determine whether line speed and number of defective parts found are related.
c. Did the estimated regression equation provide a good fit to the data?
d. Develop a $95 \%$ confidence interval to predict the mean number of defective parts for a line speed of 50 feet per minute.

Adriano Chikande
Adriano Chikande
Numerade Educator
02:05

Problem 63

A sociologist was hired by a large city hospital to investigate the relationship between the number of unauthorized days that employees are absent per year and the distance (miles) between home and work for the employees. A sample of 10 employees was chosen, and the following data were collected.
$$
\begin{array}{cc}
\text { Distance to Work (miles) } & \text { Number of Days Absent } \\
1 & 8 \\
3 & 5 \\
4 & 8 \\
6 & 7 \\
8 & 6 \\
10 & 3 \\
12 & 5 \\
14 & 2 \\
14 & 4 \\
18 & 2
\end{array}
$$
a. Develop a scatter diagram for these data. Does a linear relationship appear reasonable? Explain.
b. Develop the least squares estimated regression equation.
c. Is there a significant relationship between the two variables? Use $\alpha=.05$.
d. Did the estimated regression equation provide a good fit? Explain.
e. Use the estimated regression equation developed in part (b) to develop a $95\%$ confidence interval for the expected number of days absent for employees living 5 miles from the company.

Adriano Chikande
Adriano Chikande
Numerade Educator
02:40

Problem 64

The regional transit authority for a major metropolitan area wants to determine whether there is any relationship between the age of a bus and the annual maintenance cost. A sample of 10 buses resulted in the following data.
$$
\begin{array}{cc}
\text { Age of Bus (years) } & \text { Maintenance Cost (\$) } \\
1 & 350 \\
2 & 370 \\
2 & 480 \\
2 & 520 \\
2 & 590 \\
3 & 550 \\
4 & 750 \\
4 & 800 \\
5 & 790 \\
5 & 950
\end{array}
$$
a. Develop the least squares estimated regression equation.
b. Test to see whether the two variables are significantly related with $\alpha=.05$.
c. Did the least squares line provide a good fit to the observed data? Explain.
d. Develop a $95 \%$ prediction interval for the maintenance cost for a specific bus that is 4 years old.

Adriano Chikande
Adriano Chikande
Numerade Educator
02:10

Problem 65

A marketing professor at Givens College is interested in the relationship between hours spent studying and total points earned in a course. Data collected on 10 students who took the course last quarter follow.
$$
\begin{array}{cc}
\begin{array}{c}
\text { Hours } \\
\text { Spent Studying }
\end{array} & \begin{array}{c}
\text { Total } \\
\text { Points Earned }
\end{array} \\
45 & 40 \\
30 & 35 \\
90 & 75 \\
60 & 65 \\
105 & 90 \\
65 & 50 \\
90 & 90 \\
80 & 80 \\
55 & 45 \\
75 & 65
\end{array}
$$
a. Develop an estimated regression equation showing how total points earned is related to hours spent studying.
b. Test the significance of the model with $\alpha=.05$.
c. Predict the total points earned by Mark Sweeney. He spent 95 hours studying.
d. Develop a $95\%$ prediction interval for the total points earned by Mark Sweeney.

Adriano Chikande
Adriano Chikande
Numerade Educator
01:58

Problem 66

Reuters reported the market beta for Xerox was 1.22 (Reuters website, January 30, 2009). Market betas for individual stocks are determined by simple linear regression. For each stock, the dependent variable is its quarterly percentage return (capital appreciation plus dividends) minus the percentage return that could be obtained from a risk-free investment (the Treasury Bill rate is used as the risk-free rate). The independent variable is the quarterly percentage return (capital appreciation plus dividends) for the stock market (S\&P 500) minus the percentage return from a risk-free investment. An estimated regression equation is developed with quarterly data; the market beta for the stock is the slope of the estimated regression equation $\left(b_1\right)$. The value of the market beta is often interpreted as a measure of the risk associated with the stock. Market betas greater than 1 indicate that the stock is more volatile than the market average; market betas less than 1 indicate that the stock is less volatile than the market average. Suppose that the following figures are the differences between the percentage return and the risk-free return for 10 quarters for the S&P 500 and Horizon Technology.
$$
\begin{array}{rc}
\text { S\&P 500 } & \text { Horizon } \\
1.2 & -0.7 \\
-2.5 & -2.0 \\
-3.0 & -5.5 \\
2.0 & 4.7 \\
5.0 & 1.8 \\
1.2 & 4.1 \\
3.0 & 2.6 \\
-1.0 & 2.0 \\
.5 & -1.3 \\
2.5 & 5.5
\end{array}
$$
a. Develop an estimated regression equation that can be used to determine the market beta for Horizon Technology. What is Horizon Technology's market beta?
b. Test for a significant relationship at the .05 level of significance.
c. Did the estimated regression equation provide a good fit? Explain.
d. Use the market betas of Xerox and Horizon Technology to compare the risk associated with the two stocks.

Adriano Chikande
Adriano Chikande
Numerade Educator
03:15

Problem 67

The Transactional Records Access Clearinghouse at Syracuse University reported data showing the odds of an Internal Revenue Service audit. The following table shows the average adjusted gross income reported and the percent of the returns that were audited for 20 selected IRS districts.
$$
\begin{array}{lcc}
\text { District } & \begin{array}{c}
\text { Adjusted } \\
\text { Gross Income (\$) }
\end{array} & \begin{array}{c}
\text { Percent } \\
\text { Audited }
\end{array} \\
\text { Los Angeles } & 36,664 & 1.3 \\
\text { Sacramento } & 38,845 & 1.1 \\
\text { Atlanta } & 34,886 & 1.1 \\
\text { Boise } & 32,512 & 1.1 \\
\text { Dallas } & 34,531 & 1.0 \\
\text { Providence } & 35,995 & 1.0 \\
\text { San Jose } & 37,799 & 0.9 \\
\text { Cheyenne } & 33,876 & 0.9 \\
\text { Fargo } & 30,513 & 0.9 \\
\text { New Orleans } & 30,174 & 0.9 \\
\text { Oklahoma City } & 30,060 & 0.8 \\
\text { Houston } & 37,153 & 0.8 \\
\text { Portland } & 34,918 & 0.7 \\
\text { Phoenix } & 33,291 & 0.7 \\
\text { Augusta } & 31,504 & 0.7 \\
\text { Albuquerque } & 29,199 & 0.6 \\
\text { Greensboro } & 33,072 & 0.6 \\
\text { Columbia } & 30,859 & 0.5 \\
\text { Nashville } & 32,566 & 0.5 \\
\text { Buffalo } & 34,296 & 0.5
\end{array}
$$
a. Develop the estimated regression equation that could be used to predict the percent audited given the average adjusted gross income reported.
b. At the .05 level of significance, determine whether the adjusted gross income and the percent audited are related.
c. Did the estimated regression equation provide a good fit? Explain.
d. Use the estimated regression equation developed in part (a) to calculate a $95 \%$ confidence interval for the expected percent audited for districts with an average adjusted gross income of $$\$ 35,000$$.

Adriano Chikande
Adriano Chikande
Numerade Educator
01:51

Problem 68

The Australian Public Service Commission's State of the Service Report 2002-2003 reported job satisfaction ratings for employees. One of the survey questions asked employees to choose the five most important workplace factors (from a list of factors) that most affected how satisfied they were with their job. Respondents were then asked to indicate their level of satisfaction with their top five factors. The following data show the percentage of employees who nominated the factor in their top five, and a corresponding satisfaction rating measured using the percentage of employees who nominated the factor in the top five and who were "very satisfied" or "satisfied" with the factor in their current workplace ( www.apsc.gov.au/stateoftheservice).
$$
\begin{array}{lcc}
\text { Workplace Factor } & \text { Top Five (\%) } & \begin{array}{c}
\text { Satisfaction } \\
\text { Rating (\%) }
\end{array} \\
\text { Appropriate workload } & 30 & 49 \\
\text { Chance to be creative/innovative } & 38 & 64 \\
\text { Chance to make a useful contribution to society } & 40 & 67 \\
\text { Duties/expectations made clear } & 40 & 69 \\
\text { Flexible working arrangements } & 55 & 86 \\
\text { Good working relationships } & 60 & 85 \\
\text { Interesting work provided } & 48 & 74 \\
\text { Opportunities for career development } & 33 & 43 \\
\text { Opportunities to develop my skills } & 46 & 66 \\
\text { Opportunities to utilize my skills } & 50 & 70 \\
\text { Regular feedback/recognition for effort } & 42 & 53 \\
\text { Salary } & 47 & 62 \\
\text { Seeing tangible results from my work } & 42 & 69
\end{array}

$$
a. Develop a scatter diagram with Top Five (\%) on the horizontal axis and Satisfaction Rating (\%) on the vertical axis.
b. What does the scatter diagram developed in part (a) indicate about the relationship between the two variables?
c. Develop the estimated regression equation that could be used to predict the Satisfaction Rating$$ (\%) $$given the Top Five$$ (\%) $$.
d. Test for a significant relationship at the .05 level of significance.
e. Did the estimated regression equation provide a good fit? Explain.
f. What is the value of the sample correlation coefficient?

Adriano Chikande
Adriano Chikande
Numerade Educator