Question

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).

Weekly Usage (hours)	Annual Maintenance Expense
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

(a)

Develop the estimated regression equation that could be used to predict the annual maintenance expense (in hundreds of dollars) given the weekly usage (in hours). (Round your numerical values to two decimal places.)

ŷ =

(b)

Test the significance of the relationship in part (a) at a 0.05 level of significance. (Use the F test.)

State the null and alternative hypotheses.

H₀: β₁ ≥ 0
H_a: β₁ < 0H₀: β₀ = 0
H_a: β₀ ≠ 0    H₀: β₁ ≠ 0
H_a: β₁ = 0H₀: β₁ = 0
H_a: β₁ ≠ 0H₀: β₀ ≠ 0
H_a: β₀ = 0

Find the value of the test statistic. (Round your answer to two decimal places.)

Find the p-value. (Round your answer to three decimal places.)

p-value =

State your conclusion.

Do not reject H₀. We cannot conclude that the relationship between weekly usage (hours) and annual maintenance expense (in hundreds of dollars) is significant.Reject H₀. We conclude that the relationship between weekly usage (hours) and annual maintenance expense (in hundreds of dollars) is significant.     Do not reject H₀. We conclude that the relationship between weekly usage (hours) and annual maintenance expense (in hundreds of dollars) is significant.Reject H₀. We cannot conclude that the relationship between weekly usage (hours) and annual maintenance expense (in hundreds of dollars) is significant.

(d)

If the maintenance contract costs $2,800 per year, would you recommend purchasing it? Why or why not? (Round your answer to two decimal places.)

The expected expense of a machine being used 25 hours per week is $  hundred. Since this expected expense is  ---Select--- greater less than the cost of the maintenance contract, the maintenance contract  ---Select--- is is notadvisable.

Answer 1

The R output is: