Question

The table below gives the list price and the number of bids received for five randomly selected items sold through online auctions. Using this data, consider the equation of the regression line, yˆ=b0+b1xy^=b0+b1x, for predicting the number of bids an item will receive based on the list price. Keep in mind, the correlation coefficient may or may not be statistically significant for the data given. Remember, in practice, it would not be appropriate to use the regression line to make a prediction if the correlation coefficient is not statistically significant.

Price in DollaRS	32	34	35	43	44
Number of Bids	44	66	77	88	1010

Table

Copy Data

Step 5 of 6 :

Find the error prediction when x=34. Round your answer to three decimal places.

Answer 1

First we need to find regression equation

Let's use excel :

Step 1) First enter the given data set in the excel column.

Step 2) Click on Data >>>Data Analysis >>>Regression>>>OK

Step 3) Fill the required information

Look the following image.

Then click on OK , so we get the following output

If level of significance not given then assume it is 0.05

Decision rule

1) If p-value < level of significance then we reject null hypothesis.

1) If p-value > level of significance then we fail to reject null hypothesis.

Here Significance F (p - value) = 0.03 < 0.05 so we reject null hypothesis and conclude that there is linear relationship between x and y

So that we can use linear regression equation to predict the y values for given x values

from the above output the equation of regression line is given by:

y = -6.960396 + 0.371287 * x

Put x = 34, we get

y = -6.960396 + 0.371287 * 34 = 5.6634

Prediction error for x = 34 = 6 - 5.6634 = 0.3366 = 0.337 (After rounding up to three decimal places)