Finding regression line by using Excel
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Super Markets, Inc. is considering expanding into the Scottsdale, Arizona, area. Ms. Luann Miller, Director of Planning, must present 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 people in the region spend per month for grocery items. She would also like to include information on the relationship between the amount spent for grocery items and income. She gathered the following sample information.
Household Monthly Amount Monthly Income Household Monthly Amount Monthly Income
1 $555 $4,388 21 $ 913 $6,688
2 489 4,558 22 918 6,752
3 458 4,793 23 710 6,837
4 613 4,856 24 1,083 7,242
5 647 4,856 25 937 7,263
6 661 4,899 26 839 7,540
7 662 4,899 27 1,030 8,009
8 675 5,091 28 1,065 8,094
9 549 5,133 29 1,069 8,264
10 606 5,304 30 1,064 8,392
11 668 5,304 31 1,015 8,414
12 740 5,304 32 1,148 8,882
13 592 5,346 33 1,125 8,925
14 720 5,495 34 1,090 8,989
15 680 5,581 35 1,208 9,053
16 540 5,730 36 1,217 9,138
17 693 5,943 37 1,140 9,329
18 541 5,943 38 1,265 9,649
19 673 6,156 39 1,206 9,862
20 676 6,603 40 1,145 9,883
a. Let the amount spent be the dependent variable and monthly income the independent variable. Create a scatter diagram, using a software package.
b. Determine the regression equation. Interpret the slope value.
c. Determine the coefficient of correlation. Can you conclude that it is greater than 0?
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Solution Summary
The solution contains detailed explanation of finding simple linear regression line by using Excel.
Education
- BSc , Wuhan Univ. China
- MA, Shandong Univ.
Recent Feedback
- "Your solution, looks excellent. I recognize things from previous chapters. I have seen the standard deviation formula you used to get 5.154. I do understand the Central Limit Theorem needs the sample size (n) to be greater than 30, we have 100. I do understand the sample mean(s) of the population will follow a normal distribution, and that CLT states the sample mean of population is the population (mean), we have 143.74. But when and WHY do we use the standard deviation formula where you got 5.154. WHEN & Why use standard deviation of the sample mean. I don't understand, why don't we simply use the "100" I understand that standard deviation is the square root of variance. I do understand that the variance is the square of the differences of each sample data value minus the mean. But somehow, why not use 100, why use standard deviation of sample mean? Please help explain."
- "excellent work"
- "Thank you so much for all of your help!!! I will be posting another assignment. Please let me know (once posted), if the credits I'm offering is enough or you ! Thanks again!"
- "Thank you"
- "Thank you very much for your valuable time and assistance!"
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