Question

Exercise 13-60 (LO13-2, LO13-3, LO13-5)

Waterbury Insurance Company wants to study the relationship between the amount of fire damage and the distance between the burning house and the nearest fire station. This information will be used in setting rates for insurance coverage. For a sample of 30 claims for the last year, the director of the actuarial department determined the distance from the fire station (x) and the amount of fire damage, in thousands of dollars (y). The MegaStat output is reported below.

ANOVA table
Source	SS	df	MS		F
Regression	1,870.5782	1	1,870.5782		41.23
Residual	1,270.4934	28	45.3748
Total	3,141.0716	29

Regression output
Variables	Coefficients	Std. Error	t(df=28)
Intercept	13.4867	3.1191	2.21
Distance–X	5.2717	0.8211	6.42

A. How much damage would you estimate for a fire 4 miles from the nearest fire station? (Round your answer to the nearest dollar amount.) [THE ANSWER IS NOT 35]

Estimated Damage

Exercise 13-58 (LO13-2, LO13-3)

A consumer buying cooperative tested the effective heating area of 20 different electric space heaters with different wattages. Here are the results.

Heater	Wattage		Area
1	750		168
2	750		58
3	1,500		56
4	750		51
5	1,000		237
6	1,250		105
7	1,000		139
8	2,000		197
9	1,250		80
10	1,500		166
11	750		75
12	1,750		292
13	2,000		49
14	1,250		78
15	1,750		269
16	750		162
17	1,250		171
18	1,500		147
19	2,000		244
20	1,000		73

1. Which heater looks like the “best buy” based on the size of the residual? (Round residual value to 3 decimal places.)

The twelfth heater is the "best buy." Ith heats an area that is ______ square feet larger than estimated by the regression equation.

Answer 1