Chapter 12 Simple linear regression

12.4 (a)
6000000

CO2 Emissions (000s metric tonnes) 5000000

4000000

3000000

2000000

1000000

0
0 500 1000 1500 2000 2500 3000 3500 4000 4500
Energy Generation (Terawatt Hours)

(b) b0 = –63667.9 and b1 = 1442.216

(c) For each terawatt hour of increase in energy generation, there is an expected
increase in CO2 emission of an estimated 1442.216 (‘000) metric tonnes.

(d) Ŷ =- 63667.9 +1442.216 X =- 63667.9 +1442.216(1000)

Ŷ =1378548('000s) metric tonnes

12.5 (a)

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9781486018956 Berenson/Basic Business Statistics 4e
 (b) b0 = –19.4425 and b1 = 2.805
(c) For each additional degree of temperature, ice cream sales are expected to
increase by 2.805.

(d) Yˆ  19.4425  2.805(25)  50.68

12.6 (a)
250

200

150
Spending ($)

100

50

0
0 50 100 150 200 250 300 350
Income ($)

(b) b0 = 20.936 and b1 = 0.668

(c) For each additional unit of increase in income, spending is expected to increase
by $0.667.
(d) Ŷ =20.936 + 0.668 X

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9781486018956 Berenson/Basic Business Statistics 4e
 Ŷ =20.936 + 0.668(225) =$171.16
(b)

Crude oil price ($/barrel) residual plot

0.15

0.1

0.05
Residuals

0
60 65 70 75 80 85 90 95 100
-0.05

-0.1

-0.15
Crude oil price ($/barrel)

The residuals are well spread and show no particular pattern.

Crude oil price ($/barrel) line fit plot

1.6
1.5
1.4
Petrol price ($/litre)

1.3
1.2
1.1
1 Petrol price ($/litre)
0.9 Predicted Petrol price ($/litre)

0.8
60 65 70 75 80 85 90 95 100
Crude oil price ($/barrel)

The simple linear regression model seems to fit well.

(c)
H 0 : b 1 =0 H1 : b1 ¹ 0
b - b 0.0117 - 0
t= 1 1= =5.8373
Sb 0.0020
1

Critical values: t10 = ±2.2281

Decision rule: Reject H0 if |tcalc|> 2.2281

Since |5.8373| > 2.2281, reject H0. There is sufficient evidence to conclude that
there is a linear relationship between petrol and crude oil prices.

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9781486018956 Berenson/Basic Business Statistics 4e
(d) Y^ i ∓ t n−2 S YX √hi Ŷi ∓tn- 2 SYX hi

1 ( X - X )2
hi = + i
n SSX

Ŷi =0.3527 + 0.01166 X =5 + 3 * 4 = 1.2271

1 (75 - 81.75)2
hi = + =0.1426
12 768.25
t10 =2.2281
95% confidence interval for the mean:

1.2271∓2.2281∗0.0554 √ 0.1426 1.2271 ∓2.2281 * 0.0554 0.1426

1.1805 < YX =75 <1.2737

(e) Y^ i ∓ t n−2 S YX √1+hi Ŷi ∓tn- 2 SYX 1+ hi

95% prediction interval for an individual response:

1.2271 ∓2.2281 * 0.0554 1.1426

1.0953 < YX =4 < 1.3590

b1 - t10 Sb £b 1 £ b1 + t10 Sb
(f) 1 1

0.0117 - 2.2281(0.0020) £b 1 £ 0.0117 + 2.2281(0.0020)

0.007 £b 1 £ 0.016

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9781486018956 Berenson/Basic Business Statistics 4e