The following data— from a study of four American manufacturing companies— are available for a simple linear regression analysis attempting to link average hourly wage (x) to employee turnover rates (y).

a. Show the data in a scatter diagram and use the least squares criterion to find the slope (b) and the intercept (a) for the best fitting line. Sketch the least squares line in your scatter diagram. 

b. Verify that the least squares line here passes through the point (x, y), where x is the average x value and y is the average y value. 

c. According to the line you fit, a $ 1 increase in hourly wage can be associated a ____% decrease in the turnover rate.

Transcribed Image Text:

Average Hourly Wage (S) 18 12 20 14 Turnover Rate (%) 20 64 38