In a recent study, simple linear regression was used to link the annual R & D budget of various high tech companies to the number of patents obtained by company researchers. Data for the four companies that participated in the study are shown below.

a. Show the data in a scatter diagram and use the least squares criterion to find the slope (b) and the intercept (a) for the best fitting line. Sketch the least squares line in your scatter diagram.
b. Use the line to predict the number of patents for an annual R & D budget of $ 4 million.
c. According to the line you fit, each $ 1 million increase in a company€™s R & D budget can be associated with an increase of ___ patent(s).

Transcribed Image Text:

R & D Budget Smillions) 10 12 No. of Patents 14 16 6 5 10