The tobacco settlement negotiated by a team of eight attorneys
The tobacco settlement negotiated by a team of eight attorneys general on behalf of 41 states resulted in $206 billion to be paid by the tobacco industry to recoup Medicaid costs the states incurred while treating ill smokers. Payments are being made in annual increments over a 25-year span from 1998 to 2022. The following table shows an excerpt of the population (in millions of dollars) and the amounts (in billions of dollars) awarded to 46 states, the District of Columbia, and Puerto Rico:
a. Draw a scatter diagram of these data with tobacco settlement as the dependent variable, y, and population as the predictor variable, x.
b. Calculate the regression equation and draw the regression line on the scatter diagram.
c. If your state’s population were equal to 11.5 million people, of all 48 observations shown in the table, what would you estimate your state’s tobacco settlement to be? Make your estimate based on the equation and then draw a line on the scatter diagram to illustrate it.
d. Construct a 95% prediction interval for the estimate you obtained in part c.
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