An online clothing retailer examined their transactional database to see if total yearly Purchases ($) were related to customers’ Incomes ($). (You may assume that the assumptions and conditions for regression are met.)
The least squares linear regression is:
Purchases = —31.6 + 0.012 Income.
a) Interpret the intercept in the linear model.
b) Interpret the slope in the linear model.
c) If a customer has an Income of $20,000, what is his predicted total yearly Purchases?
d) This customer’s yearly Purchases were actually $ 100. What is the residual using this linear model? Did the model provide an underestimate or overestimate for this customer?

  • CreatedMay 14, 2015
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