The Owner of a Bakery Wants to Analyze the Relationship

The owner of a bakery wants to analyze the relationship between the expenditure of a customer and the customer's income. A sample of 5 customers is taken and the following information was obtained. The least squares estimated line is = 4.348 + 0.0826 X.
a.Obtain a measure of how well the estimated regression line fits the data.
b.You want to test to see if there is a significant relationship between expenditure and income at the 5% level of significance. Be sure to state the null and alternative hypotheses.
c.Construct a 95% confidence interval estimate for the average expenditure for all customers with an income of $20,000.
d.Construct a 95% confidence interval estimate for the expenditure of one customer whose income is $20,000.

Correct Answer:

Verified

a.R² = 0.0079
b.H₀: ₁ = 0
H_a: ₁ 0
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