Question

From the Tsunami data set we know that the regression equation for the whole data set was

y = 3.025E-11 (GDP) + 6.83E-03(Distance) + 6.121(Dead) + 44.049

Wakanda's GDP is $ 200 T (in US dollars), 4034 miles from Banda Aceh and zero Wakandans died in the Tsunami. Wakanda donated $900 M in US $ to the relief effort.

Based on the above values, what is Wakanda's predicted giving? And what was the residual of the prediction versus the actual value (negative numbers should indicate less actual giving than predicted).

Answer 1

Given the regression equation is:

y = 3.025E-11 (GDP) + 6.83E-03(Distance) + 6.121(Dead) + 44.049, where y= Wakanda's donation (in $M) in US to relief effort.

Here given that GDP is $ 200 T, Distance is 4034 miles and 0 died.

Thus Wakanda's predicted giving is:

3.025*E(-11)*200 + 6.83*E(-3)*4034 + 44.049 = 1415.803. Hence predicted Wakanda's giving is $ 1415.803 M.

Given that Wakanda donated $900 M in US $ to the relief effort, thus the residual is: Observed- predicted = -$515.803M