SIMPLE LINEAR REGRESSION ANALYSIS

Reading Computer Printout and Interpret the Results

1. Assume a sample is taken of six households asking for the levels of income (X) and

consumption (Y) in thousands of dollars as reported in the following table:

X Y

25 23

30 28

35 31

40 36

45 41

50 46

Given the above information, use the computer printout to show the following

information:

a. a Scatter Diagram

b. the equation for the least squares regression line which will best fit the data

c. Does the sign of the slope coefficient make economic sense? Interpret its meaning.

d. the coefficient of correlation, coefficient of determination and Adjusted r2.

What do these coefficients tell you?

2. Prior to being hired, the five salespersons for a computer store were given a standard sales

aptitude test. For each individual, the score achieved on the aptitude test and the number of

computer systems sold during the first 3 months of their employment are shown here. Assume

X represents score on aptitude test and Y represents units sold in 3 months.

X Y

80 25

70 15

45 10

90 40

20 5

Given the above information, use the computer printout to show the following

information:

a. a Scatter Diagram

b. the equation for the least squares regression line which will best fit the data

c. Does the sign of the slope coefficient make economic sense? Interpret its meaning.

d. the coefficient of correlation, coefficient of determination and Adjusted r2.

What do these coefficients tell you?

IT HAS TO BE DONE IN EXCEL.