A statistical program is recommended.

A sales manager collected the following data onx= years of experienceandy= annualsales ($1,000s). The estimated regression equation for these data is=83+ 4x.

Salesperson Years ofExperience Annual Sales($1,000s)

1 1 1

2 3 97

3 4 102

4 4 107

5 6 103

6 8 116

7 10 119

8 10 123

9 11 127

10 13 136

(a)

Compute the residuals.

Years ofExperience Annual Sales($1,000s) Residuals

1 80

3 97

4 102

4 107

6 103

8 116

10 119

10 123

11 127

13 136

Construct a residual plot.

1. A residual plot has 10 points plotted on it. The horizontal axis ranges from 0 to 14 and is labeled: Years of Experience. The vertical axis ranges from16 to 16 and is labeled: Residuals. There is a horizontal line that spans the graph at 0 on the vertical axis. There are 3 points below the line, 5 points above the line, and 2 points on the line. The points are plotted from left to right in an upward, diagonal direction starting from the lower left corner of the plot. The points are between 1 to 13 on the horizontal axis and between7 to 8 on the vertical axis.
2. A residual plot has 10 points plotted on it. The horizontal axis ranges from 0 to 14 and is labeled: Years of Experience. The vertical axis ranges from16 to 16 and is labeled: Residuals. There is a horizontal line that spans the graph at 0 on the vertical axis. There are 3 points below the line, 5 points above the line, and 2 points on the line. The points are plotted from left to right in a downward, diagonal direction starting from the upper left corner of the plot. The points are between 1 to 13 on the horizontal axis and between7 to 8 on the vertical axis.
3. A residual plot has 10 points plotted on it. The horizontal axis ranges from 0 to 14 and is labeled: Years of Experience. The vertical axis ranges from16 to 16 and is labeled: Residuals. There is a horizontal line that spans the graph at 0 on the vertical axis. There are 5 points below the line, 3 points above the line, and 2 points on the line. The points are between 1 to 13 on the horizontal axis and appear to vary randomly between8 to 7 on the vertical axis. The maximum residual is at 1 year of experience while the minimum is at 4 years of experience.
4. A residual plot has 10 points plotted on it. The horizontal axis ranges from 0 to 14 and is labeled: Years of Experience. The vertical axis ranges from16 to 16 and is labeled: Residuals. There is a horizontal line that spans the graph at 0 on the vertical axis. There are 3 points below the line, 5 points above the line, and 2 points on the line. The points are between 1 to 13 on the horizontal axis and appear to vary randomly between7 to 8 on the vertical axis. The maximum residual is at 4 years of experience while the minimum is at 1 year of experience.

(b)

Do the assumptions about the error terms seem reasonable in light of the residual plot?

• The plot suggests a generally horizontal band of residual points indicating that the error term assumptions appear reasonable.
• The plot suggests a generally horizontal band of residual points indicating that the error term assumptions do not appear reasonable.
• The plot suggests a funnel pattern in the residuals indicating that the error term assumptions do not appear reasonable.
• The plot suggests curvature in the residuals indicating that the error term assumptions appear reasonable.
• The plot suggests a funnel pattern in the residuals indicating that the error term assumptions appear reasonable.