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Linear Regression and Correlation for Supermarket Income

Super Markets Inc is considering expanding into the Scottsdale Arizona area.MS Luann Miller,Director of Planning,must provide an analysis of the proposed expansion to the operating committee of the board of directors. As a part of her proposal,she needs to include information on the amount of people in the region spend pre month for grocery items.She would like to also include information on the relationship between the amount spent for grocery items and income.She gathered the following sample information.

Household 1 Monthly Amount $555 Monthly Income $4388
Household 2 Monthly Amount 489 Monthly Income 4558
Household 3 Monthly Amount 458 Monthly Income 4793
Household 4 Monthly Amount 613 Monthly Income 4856
Household 5 Monthly Amount 647 Monthly Income 4856
Household 6 Monthly Amount 661 Monthly Income 4899
Household 7 Monthly Amount 662 Monthly Income 4899
Household 8 Monthly Amount 675 Monthly Income 5091
Household 9 Monthly Amount 549 Monthly Income 5133
Household 10 Monthly Amount 606 Monthly Income 5304
Household 11 Monthly Amount 668 Monthly Income 5304
Hosehold 12 Monthly Amount 740 Monthly income 5304
Household 13 Monthly Amount 592 Monthly Income 5346
Household 14 Monthly Amount 720 Monthly Income 5495
Household 15 Monthly Amount 680 Monthly Income 5581
Household 16 Monthly Amount 540 Monthly Income 5730
Household 17 Monthly Amount 693 Monthly Income 5943
Household 18 Monthly Amount 541 Monthly Income 5943
Household 19 Monthly Amount 673 Monthly Income 6156
Household 20 Monthly Amount 676 Monthly Income 6603
Household 21 Monthly Amount 914 Monthly Income 6688
Household 22 Monthly Amount 918 Monthly Income 6752
Household 23 Monthly Amount 710 Monthly Income 6837
Household 24 Monthly Amount 1083 Monthly Income 7242
Household 25 Monthly Amount 937 Monthly Income 7263
Household 26 Monthly Amount 839 Monthly Income 7540
Household 27 Monthly Amount 1030 Monthly Income 8009
Household 28 Monthly Amount 1065 Monthly Income 8094
Household 29 Monthly Amount 1069 Monthly Income 8264
Household 30 Monthly Amount 1064 Monthly Income 8392
Household 31 Monthly Amount 1015 Monthly Income 8414
Household 32 Monthly Amount 1148 Monthly Income 8882
Household 33 Monthly Amount 1125 Monthly Income 8925
Household 34 Monthly Amount 1090 Monthly Income 8989
Household 35 Monthly Amount 1208 Monthly Income 9053
Household 36 Monthly Amount 1217 Monthly Income 9138
Household 37 Monthly Amount 1140 Monthly Income 9329
Household 38 Monthly Amount 1265 Monthly Income 9649
Household 39 Monthly Amount 1206 Monthly Income 9862
Household 40 Monthly Amount 1145 Monthly Income 9883

a. Let the amount spent be the dependent variable and the monthly income be the independent variable. Create a scatter diagram.

b. Determine the regression equation.Interpret the slope value.

c. Determine the coefficient of correlation. Can you conclude that it is greater than 0? I know a value of 0 means that there is a random nonlinear relationship between the 2 variables but I do not know how to represent it.

I would gladly appreciate any help on this.

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Solution Summary

Shows how to find regression equation, coefficient of correlation and draw a scatter diagram. Attached in 3 formats; includes links to an Excel tutorial and further reading.

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