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In: Statistics and Probability

Assume a sample is taken of six households asking for the levels of income (X) and...

Assume a sample is taken of six households asking for the levels of income (X) and consumption (Y) in thousands of dollars as reported in the following table:

X Y
6 34
8 40
12 56
20 80
28 86

a. Derive the equation for the least squares regression line which will best fit the data

b. Does the sign of the slope coefficient make economic sense? Interpret its meaning.

c. Determine the coefficient of correlation, coefficient of determination and Adjusted r2. What do these coefficients tell you?

d. Find the t statistic for the slope coefficient. What does it signify? Test at α= 0.05

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Expert Solution

orchestra answered 2 years ago
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