The following exercises require the use of a
computer and software.
An economist for the federal government is attempting to produce a better measure of poverty than is currently in use. To help acquire information, she recorded the annual household income (in $1,000s) and the amount of money spent on food during one week for a random sample of households.
a) Determine the coefficient of determination
(to 4 decimals) and describe what it tells you.
b) ______% of the variation in food budgets is explained by the variation in household income.
c) Conduct a test to determine
whether there is evidence of a linear relationship between
household income and food budget.
Regression output using Excel
|Adjusted R Square||0.2407751|
|Coefficients||Standard Error||t Stat||P-value||Lower 95%||Upper 95%|
(a) R^2 = 0 .2459
( b ) 24 .59 %
( c ) is
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