The graphic in Applied Example 13. 6 reports the effect each at-fault traffic accident had on 2009 average annual auto insurance premiums.
a. Does it appear that the variable “number of at-fault accidents” had a recurring effect on average annual premiums? Estimate the annual effect.
b. How does the annual effect found in part a relate to the potential line of best fit, annual premium = y-intercept = slope x “number of at-fault accidents”)?
c. The graphic reports only one value of premiums for each number of accidents, but each dollar amount reported summarizes the amount of many premiums. How does this situation relate to the underlying assumption that there is a distribution of ordinate values (y values) for each abscissa value (x value)?