The data in the table on the next page were collected for a random sample of 26 households in Washington, DC An economist wants to relate household food consumption, y. to household income, x1, and household size,x2. with the first-order model
E(y) = β0 + β1x1 +β2x2.
a. Fit the model to the data. Do you detect any signs of multicollinearity in the data? Explain.
b. Is there visual evidence (from a residual plot) that a second-order model may be more appropriate for predicting household food consumption? Explain.
c. Comment on the assumption of constant error variance, using a residual plot. Does it appear to be satisfied?
d. Are there any outliers in the data? If so, identify them.
e. Based on a graph of the residuals, does the assumption of normal errors appear to be reasonably satisfied? Explain.

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