Question

The data given below gives annual income (?) of 10 families and their annual expenditures on entertainment and recreation (?), all expressed in thousands of dollars. It is hypothesized that the expenditure on entertainment and recreation is linearly related to income, i.e. ?? = ?+ ??? + ??. The following question should be answered using Excel, or a calculator. Make sure that you clearly write out which formula you apply and present your calculations.

Y ：2，4.2，3.4，4.9，6.6，5.9，4.8，2.8，5.1，8.6.

X：11，16，14，26，45，32，24，18，25，50.

Estimate α-bar and β-bar (show all computations) write out the estimated regression line and graph it. Interpret the coefficients.

Answer 1

Solution:

The slope of the regression equation (0.141) is interpreted as for 1000 dollars increase in annual family income, the expenditure on entertainment and recreation is expected to increase by 141 dollars.

The intercept of the regression equation (1.160) is interpreted the expected value of the expenditure on entertainment and recreation is 1160 dollars when annual family income is 0.