Simple Linear Regression analysis is a statistical technique that attempts to explore and model the linear relationship between two variables for decision making.

You are required to describe a situation in the field of economics where a simple linear regression analysis has to be applied. In your write up you have to:

1. Provide a brief background of the situation you are going to look at. Specifically, why did you choose the dependent variable you chose? Indicate the general model that you are going to estimate. Discuss what you think the relationship is between the dependent variable and the independent variables, and what that leads you to conclude about the expected signs of the coefficients in the model.

2. Using a numerical example, apply the simple linear regression analysis techniques and Present the estimated model. Give an interpretation of each of the estimated coefficients. Determine the measures of goodness of fit and discuss the validity of the model.