1) Based on the data below with the predicted income of someone with 14 years education - how may errors of prediction would we make using the line of fit to estimate income based on these 7 observations ?

Multiple choice:

a) -16548.32

b) -8644.84

c) -1194.18

d) -8870.9 and

2. What amount of variation in income is explained by education?

a) 54%

b) 0.09%

c) 24.2%

d) 73.9%

The Relationship Between Years of Education and Income

Observation X Y 1 12 20000 2 13 22000 3 12 23000 4 14 25000 5 12 18000 6 15 30000 TI' 12 28000 Now. with the provided sample values of the dependent and the Independent variable. we need to construct the following table to compute the estimated regression coefficients: Observation X Y X? Y; X; - Y, 1 12 20000 144 400000000 240000 2 13 22000 159 434000000 250000 3 12 23000 144 529000000 276000 4 14 25000 196 625000000 350000 5 12 13000 144 324000000 216000 15 30000 225 900000000 450000 7 12 26000 144 676000000 312000 Sum = 90 164000 1166 3938000000 2130000