In problem 12.10, you were asked to develop the equation of a regression model to predict the number of business bankruptcies by the number of firm births. Using this regression model and the data given in problem 12.10 (and provided here again), solve for the predicted values of y and the residuals. Comment on the size of the residuals.

Business Bankruptcies (1,000) Firm Births (10,000)

34.3 ...........58.1

35.0 ...........55.4

38.5 ...........57.0

40.1 ...........58.5

35.5 ...........57.4

37.9 ...........58.0