Super Markets Inc. is considering expanding into the Scottsdale, Arizona, area. You, as director of planning, must present an analysis of the proposed expansion to the operating committee of the board of directors. As a part of your proposal, you need to include information on the amount people in the region spend per month for grocery items. You would also like to include information on the relationship between the amount spent for grocery items and income. Your assistant gathered the following sample information.

a. Draw a scatter diagram. Based on these data, does it appear that there is a relationship between monthly income and amount spent?

b. Determine the correlation coefficient. Can we conclude that there is a positive correlation between monthly income and amount spent? Use the .05 significance level.

c. Determine and interpret the coefficient of determination.

d. Determine the standard error of estimate.

e. Would you recommend using the regression equation to predict amount spent with monthly income? Why or why not.

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Amount Spent $ 555 Household Monthly Income 1 $4,388 2 489 4,558 39 1,206 9,862 40 1,145 9,883