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Regression Analysis and Hypothesis Test

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53. The following data show the retail price for 12 randomly selected laptop computers along with their corresponding processor speeds in gigahertz.
Computer Speed Price Computer Speed Price
1 2.0 2,689 7 2.0 2,929
2 1.6 1,229 8 1.6 1,849
3 1.6 1,419 9 2.0 2,819
4 1.8 2,589 10 1.6 2,669
5 2.0 2,849 11 1.0 1,249
6 1.2 1,349 12 1.4 1,159

a. Develop a linear equation that can be used to describe how the price depends on the processor speed.

b. Based on your regression equation, is there one machine that seems particularly over or under-priced?

c. Compute the correlation coefficient between the two variables. At the .05 significance level conduct a test of hypothesis to determine if the population correlation could be greater than zero.

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Solution Summary

The solution provides step-by-step method of performing a Regression Analysis and Correlation Hypothesis Test. Regression Analysis (Correlation Coefficient, Coefficient of Determination, Covariance, Regression Equation etc.) have been performed in EXCEL. All the steps involved in Correlation Hypothesis Test (formulation of Null and Alternate Hypothesis, Selection of Significance Level, Choosing the appropriate Test-Statistic, Decision Rule, Calculation of Test-Statistic, P-Value and Conclusion) have been explained in details.