CHAPTER FOURTEEN

SIMPLE LINEAR REGRESSION

MULTIPLE CHOICE QUESTIONS

In the following multiple choice questions, circle the correct answer.
1.

The standard error is the

a. t-statistic squared
b. square root of SSE
c. square root of SST
d. square root of MSE

2.

If MSE is known, you can compute the

a. r square
b. coefficient of determination
c. standard error
d. all of these alternatives are correct

3.

In regression analysis, which of the following is not a required assumption about

the error term ?
a. The expected value of the error term is one.
b. The variance of the error term is the same for all values of X.
c. The values of the error term are independent.
d. The error term is normally distributed.

4.

A regression analysis between sales (Y in $1000) and advertising (X in dollars)

resulted in the following equation
= 30,000 + 4 X
Y

The above equation implies that an

a. increase of $4 in advertising is associated with an increase of $4,000 in sales
b. increase of $1 in advertising is associated with an increase of $4 in sales
c. increase of $1 in advertising is associated with an increase of $34,000 in sales
d. increase of $1 in advertising is associated with an increase of $4,000 in sales
5.

Regression analysis is a statistical procedure for developing a mathematical

equation that describes how
a. one independent and one or more dependent variables are related
b. several independent and several dependent variables are related
c. one dependent and one or more independent variables are related
d. None of these alternatives is correct.

6.

In a simple regression analysis (where Y is a dependent and X an independent

Chapter Fourteen
variable), if the Y intercept is positive, then
a. there is a positive correlation between X and Y
b. if X is increased, Y must also increase
c. if Y is increased, X must also increase
d. None of these alternatives is correct.

7.

In regression analysis, the variable that is being predicted is the

a. dependent variable
b. independent variable
c. intervening variable
d. is usually x

8.

The equation that describes how the dependent variable (y) is related to the
independent variable (x) is called
a. the correlation model
b. the regression model
c. correlation analysis
d. None of these alternatives is correct.

9.

In regression analysis, the independent variable is

a. used to predict other independent variables
b. used to predict the dependent variable
c. called the intervening variable
d. the variable that is being predicted

10.

Larger values of r2 imply that the observations are more closely grouped about the
a. average value of the independent variables
b. average value of the dependent variable
c. least squares line
d. origin

11.

In a regression model involving more than one independent variable, which of the
following tests must be used in order to determine if the relationship between the
dependent variable and the set of independent variables is significant?
a. t test
b. F test
c. Either a t test or a chi-square test can be used.
d. chi-square test

12.

In simple linear regression analysis, which of the following is not true?

a. The F test and the t test yield the same results.
b. The F test and the t test may or may not yield the same results.
c. The relationship between X and Y is represented by means of a straight line.
d. The value of F = t2.

13.

Correlation analysis is used to determine

a. the equation of the regression line
b. the strength of the relationship between the dependent and the independent

Simple Linear Regression

variables
c. a specific value of the dependent variable for a given value of the independent
variable
d. None of these alternatives is correct.
14.

In a regression and correlation analysis if r2 = 1, then

a. SSE must also be equal to one
b. SSE must be equal to zero
c. SSE can be any positive value
d. SSE must be negative

15.

In a regression and correlation analysis if r2 = 1, then

a. SSE = SST
b. SSE = 1
c. SSR = SSE
d. SSR = SST

16.

In the case of a deterministic model, if a value for the independent variable is

specified, then the
a. exact value of the dependent variable can be computed
b. value of the dependent variable can be computed if the same units are used
c. likelihood of the dependent variable can be computed
d. None of these alternatives is correct.

17.

In a regression analysis if SSE = 200 and SSR = 300, then the coefficient of
determination is
a. 0.6667
b. 0.6000
c. 0.4000
d. 1.5000

18.

If the coefficient of determination is equal to 1, then the coefficient of correlation

a. must also be equal to 1
b. can be either -1 or +1
c. can be any value between -1 to +1
d. must be -1

19.

In a regression analysis, the variable that is being predicted

a. must have the same units as the variable doing the predicting
b. is the independent variable
c. is the dependent variable
d. usually is denoted by x

20.

Regression analysis was applied between demand for a product (Y) and the price
of the product (X), and the following estimated regression equation was obtained.
= 120 - 10 X
Y

Chapter Fourteen
Based on the above estimated regression equation, if price is increased by 2 units,
then demand is expected to
a. increase by 120 units
b. increase by 100 units
c. increase by 20 units
d. decease by 20 units

21.

The coefficient of correlation

a. is the square of the coefficient of determination
b. is the square root of the coefficient of determination
c. is the same as r-square
d. can never be negative

22.

If the coefficient of determination is a positive value, then the regression equation

a. must have a positive slope
b. must have a negative slope
c. could have either a positive or a negative slope
d. must have a positive y intercept

23.

If the coefficient of correlation is 0.8, the percentage of variation in the dependent

variable explained by the variation in the independent variable is
a. 0.80%
b. 80%
c. 0.64%
d. 64%

24.

In regression and correlation analysis, if SSE and SST are known, then with this
information the
a. coefficient of determination can be computed
b. slope of the line can be computed
c. Y intercept can be computed
d. x intercept can be computed

25.

In regression analysis, if the independent variable is measured in pounds, the

dependent variable
a. must also be in pounds
b. must be in some unit of weight
c. can not be in pounds
d. can be any units

26.

If there is a very weak correlation between two variables, then the coefficient of
determination must be
a. much larger than 1, if the correlation is positive
b. much smaller than 1, if the correlation is negative
c. much larger than one
d. None of these alternatives is correct.

27.

SSE can never be

Simple Linear Regression

a.
b.
c.
d.

larger than SST

smaller than SST
equal to 1
equal to zero

28.

If the coefficient of correlation is a positive value, then the slope of the regression
line
a. must also be positive
b. can be either negative or positive
c. can be zero
d. can not be zero

29.

If the coefficient of correlation is a negative value, then the coefficient of

determination
a. must also be negative
b. must be zero
c. can be either negative or positive
d. must be positive

30.

It is possible for the coefficient of determination to be

a. larger than 1
b. less than one
c. less than -1
d. None of these alternatives is correct.

31.

If two variables, x and y, have a good linear relationship, then

a. there may or may not be any causal relationship between x and y
b. x causes y to happen
c. y causes x to happen
d. None of these alternatives is correct.

32.

If the coefficient of determination is 0.81, the coefficient of correlation

a. is 0.6561
b. could be either + 0.9 or - 0.9
c. must be positive
d. must be negative

33.

A least squares regression line

a. may be used to predict a value of y if the corresponding x value is given
b. implies a cause-effect relationship between x and y
c. can only be determined if a good linear relationship exists between x and y
d. None of these alternatives is correct.

34.

If all the points of a scatter diagram lie on the least squares regression line, then
the coefficient of determination for these variables based on this data is
a. 0
b. 1
c. either 1 or -1, depending upon whether the relationship is positive or negative

Chapter Fourteen
d. could be any value between -1 and 1

35.

If a data set has SSR = 400 and SSE = 100, then the coefficient of determination is
a. 0.10
b. 0.25
c. 0.40
d. 0.80

36.

Compared to the confidence interval estimate for a particular value of y (in a linear
regression model), the interval estimate for an average value of y will be
a. narrower
b. wider
c. the same
d. None of these alternatives is correct.

37.

A regression analysis between sales (in $1000) and price (in dollars) resulted in the
following equation
= 50,000 - 8X
Y

The above equation implies that an

a. increase of $1 in price is associated with a decrease of $8 in sales
b. increase of $8 in price is associated with an increase of $8,000 in sales
c. increase of $1 in price is associated with a decrease of $42,000 in sales
d. increase of $1 in price is associated with a decrease of $8000 in sales
38.

In a regression analysis if SST = 500 and SSE = 300, then the coefficient of
determination is
a. 0.20
b. 1.67
c. 0.60
d. 0.40

39.

Regression analysis was applied between sales (in $1000) and advertising (in $100)
and the following regression function was obtained.
= 500 + 4 X
Y

Based on the above estimated regression line if advertising is $10,000, then the
point estimate for sales (in dollars) is
a. $900
b. $900,000
c. $40,500
d. $505,000
40.

The coefficient of correlation

a. is the square of the coefficient of determination
b. is the square root of the coefficient of determination

Simple Linear Regression

c. is the same as r-square
d. can never be negative
41.

If the coefficient of correlation is 0.4, the percentage of variation in the dependent

variable explained by the variation in the independent variable
a. is 40%
b. is 16%.
c. is 4%
d. can be any positive value

42.

In regression analysis if the dependent variable is measured in dollars, the

independent variable
a. must also be in dollars
b. must be in some units of currency
c. can be any units
d. can not be in dollars

43.

If there is a very weak correlation between two variables then the coefficient of
correlation must be
a. much larger than 1, if the correlation is positive
b. much smaller than 1, if the correlation is negative
c. any value larger than 1
d. None of these alternatives is correct.

44.

If the coefficient of correlation is a negative value, then the coefficient of

determination
a. must also be negative
b. must be zero
c. can be either negative or positive
d. must be positive

45.

A regression analysis between demand (Y in 1000 units) and price (X in dollars)

resulted in the following equation
= 9 - 3X
Y

The above equation implies that if the price is increased by $1, the demand is
expected to
a. increase by 6 units
b. decrease by 3 units
c. decrease by 6,000 units
d. decrease by 3,000 units
46.

In a regression analysis if SST=4500 and SSE=1575, then the coefficient of

determination is
a. 0.35
b. 0.65
c. 2.85

Chapter Fourteen
d. 0.45

47.

Regression analysis was applied between sales (in $10,000) and advertising (in
$100) and the following regression function was obtained.

Y = 50 + 8 X

Based on the above estimated regression line if advertising is $1,000, then the
point estimate for sales (in dollars) is
a. $8,050
b. $130
c. $130,000
d. $1,300,000
48.

If the coefficient of correlation is a positive value, then

a. the intercept must also be positive
b. the coefficient of determination can be either negative or positive, depending
on the value of the slope
c. the regression equation could have either a positive or a negative slope
d. the slope of the line must be positive

49.

If the coefficient of determination is 0.9, the percentage of variation in the

dependent variable explained by the variation in the independent variable
a. is 0.90%
b. is 90%.
c. is 0.81%
d. can be any positive value

50.

Regression analysis was applied between sales (Y in $1,000) and advertising (X in

$100), and the following estimated regression equation was obtained.
= 80 + 6.2 X
Y

Based on the above estimated regression line, if advertising is $10,000, then the
point estimate for sales (in dollars) is
a. $62,080
b. $142,000
c. $700
d. $700,000
Exhibit 14-1
The following information regarding a dependent variable (Y) and an independent variable
(X) is provided.
Y
4
3
4

X
2
1
4

Simple Linear Regression

6
8

3
5

SSE = 6
SST = 16
51.

Refer to Exhibit 14-1. The least squares estimate of the Y intercept is

a. 1
b. 2
c. 3
d. 4

52.

Refer to Exhibit 14-1. The least squares estimate of the slope is

a. 1
b. 2
c. 3
d. 4

53.

Refer to Exhibit 14-1. The coefficient of determination is

a. 0.7096
b. - 0.7906
c. 0.625
d. 0.375

54.

Refer to Exhibit 14-1. The coefficient of correlation is

a. 0.7096
b. - 0.7906
c. 0.625
d. 0.375

55.

Refer to Exhibit 14-1. The MSE is

a. 1
b. 2
c. 3
d. 4

Exhibit 14-2
You are given the following information about y and x.
y
Dependent Variable
5
4
3
2
1
56.

x
Independent Variable
1
2
3
4
5

Refer to Exhibit 14-2. The least squares estimate of b1 equals

10

Chapter Fourteen
a.
b.
c.
d.

1
-1
6
5

57.

Refer to Exhibit 14-2. The least squares estimate of b0 equals

a. 1
b. -1
c. 6
d. 5

58.

Refer to Exhibit 14-2. The point estimate of y when x = 10 is

a. -10
b. 10
c. -4
d. 4

59.

Refer to Exhibit 14-2. The sample correlation coefficient equals

a. 0
b. +1
c. -1
d. -0.5

60.

Refer to Exhibit 14-2. The coefficient of determination equals

a. 0
b. -1
c. +1
d. -0.5

Exhibit 14-3
You are given the following information about y and x.
y
Dependent Variable
12
3
7
6

x
Independent Variable
4
6
2
4

61.

Refer to Exhibit 14-3. The least squares estimate of b1 equals

a. 1
b. -1
c. -11
d. 11

62.

Refer to Exhibit 14-3. The least squares estimate of b0 equals

a. 1
b. -1

Simple Linear Regression

c. -11
d. 11
63.

Refer to Exhibit 14-3. The sample correlation coefficient equals

a. -0.4364
b. 0.4364
c. -0.1905
d. 0.1905

64.

Refer to Exhibit 14-3. The coefficient of determination equals

a. -0.4364
b. 0.4364
c. -0.1905
d. 0.1905

Exhibit 14-4
Regression analysis was applied between sales data (in $1,000s) and advertising data (in
$100s) and the following information was obtained.
= 12 + 1.8 x
n = 17
SSR = 225
SSE = 75
Sb1 = 0.2683
65.

Refer to Exhibit 14-4. Based on the above estimated regression equation, if

advertising is $3,000, then the point estimate for sales (in dollars) is
a. $66,000
b. $5,412
c. $66
d. $17,400

66.

Refer to Exhibit 14-4. The F statistic computed from the above data is
a. 3
b. 45
c. 48
d. 50

67.

Refer to Exhibit 14-4. To perform an F test, the p-value is

a. less than .01
b. between .01 and .025
c. between .025 and .05
d. between .05 and 0.1

68.

Refer to Exhibit 14-4. The t statistic for testing the significance of the slope is
a. 1.80
b. 1.96

11

12

Chapter Fourteen
c. 6.709
d. 0.555

69.

Refer to Exhibit 14-4. The critical t value for testing the significance of the slope
at 95% confidence is
a. 1.753
b. 2.131
c. 1.746
d. 2.120

Exhibit 14-5
The following information regarding a dependent variable (Y) and an independent variable
(X) is provided.
Y
1
2
3
4
5

X
1
2
3
4
5

70.

Refer to Exhibit 14-5. The least squares estimate of the Y intercept is

a. 1
b. 0
c. -1
d. 3

71.

Refer to Exhibit 14-5. The least squares estimate of the slope is

a. 1
b. -1
c. 0
d. 3

72.

Refer to Exhibit 14-5. The coefficient of correlation is

a. 0
b. -1
c. 0.5
d. 1

73.

Refer to Exhibit 14-5. The coefficient of determination is

a. 0
b. -1
c. 0.5
d. 1

74.

Refer to Exhibit 14-5. The MSE is

a. 0
b. -1

Simple Linear Regression

c. 1
d. 0.5
Exhibit 14-6
For the following data the value of SSE = 0.4130.
y
x
Dependent Variable
Independent Variable
15
4
17
6
23
2
17
4
75.

Refer to Exhibit 14-6. The slope of the regression equation is

a. 18
b. 24
c. 0.707
d. -1.5

76.

Refer to Exhibit 14-6. The y intercept is

a. -1.5
b. 24
c. 0.50
d. -0.707

77.

Refer to Exhibit 14-6. The total sum of squares (SST) equals

a. 36
b. 18
c. 9
d. 1296

78.

Refer to Exhibit 14-6. The coefficient of determination (r2) equals

a. 0.7071
b. -0.7071
c. 0.5
d. -0.5

Exhibit 14-7
You are given the following information about y and x.
y
Dependent Variable
5
7
9
11
79.

x
Independent Variable
4
6
2
4

Refer to Exhibit 14-7. The least squares estimate of b1 equals

a. -10

13

14

Chapter Fourteen
b. 10
c. 0.5
d. -0.5

80.

Refer to Exhibit 14-7. The least squares estimate of b0 equals

a. -10
b. 10
c. 0.5
d. -0.5

81.

Refer to Exhibit 14-7. The sample correlation coefficient equals

a. 0.3162
b. -0.3162
c. 0.10
d. -0.10

82.

Refer to Exhibit 14-7. The coefficient of determination equals

a. 0.3162
b. -0.3162
c. 0.10
d. -0.10

Exhibit 14-8
The following information regarding a dependent variable Y and an independent variable
X is provided
X = 90
Y = 340
n=4
SSR = 104

Y Y X X = -156
2
X X = 234
2
Y Y = 1974

83.

Refer to Exhibit 14-8. The total sum of squares (SST) is

a. -156
b. 234
c. 1870
d. 1974

84.

Refer to Exhibit 14-8. The sum of squares due to error (SSE) is

a. -156
b. 234
c. 1870
d. 1974

85.

Refer to Exhibit 14-8. The mean square error (MSE) is

a. 1870
b. 13
c. 1974

Simple Linear Regression

d. 233.75
86.

Refer to Exhibit 14-8. The slope of the regression equation is

a. -0.667
b. 0.667
c. 40
d. -40

87.

Refer to Exhibit 14-8. The Y intercept is

a. -0.667
b. 0.667
c. 40
d. -40

88.

Refer to Exhibit 14-8. The coefficient of correlation is

a. -0.2295
b. 0.2295
c. 0.0527
d. -0.0572

Exhibit 14-9
A regression and correlation analysis resulted in the following information regarding a
dependent variable (y) and an independent variable (x).
X = 90
Y Y X X = 466
2
Y = 170
X X = 234
2
n = 10
Y Y = 1434
SSE = 505.98
89.

Refer to Exhibit 14-9. The least squares estimate of b1 equals

a. 0.923
b. 1.991
c. -1.991
d. -0.923

90.

Refer to Exhibit 14-9. The least squares estimate of b0 equals

a. 0.923
b. 1.991
c. -1.991
d. -0.923

91.

Refer to Exhibit 14-9. The sum of squares due to regression (SSR) is

a. 1434
b. 505.98
c. 50.598
d. 928.02

15

16

Chapter Fourteen

92.

Refer to Exhibit 14-9. The sample correlation coefficient equals

a. 0.8045
b. -0.8045
c. 0
d. 1

93.

Refer to Exhibit 14-9. The coefficient of determination equals

a. 0.6471
b. -0.6471
c. 0
d. 1

Exhibit 14-10
The following information regarding a dependent variable Y and an independent variable
X is provided.
X = 16
Y = 28
n=4
SSE = 34

X X Y Y = -8
2
X X = 8
SST = 42

94.

Refer to Exhibit 14-10. The slope of the regression function is

a. -1
b. 1.0
c. 11
d. 0.0

95.

Refer to Exhibit 14-10. The Y intercept is

a. -1
b. 1.0
c. 11
d. 0.0

96.

Refer to Exhibit 14-10. The coefficient of determination is

a. 0.1905
b. -0.1905
c. 0.4364
d. -0.4364

97.

Refer to Exhibit 14-10. The coefficient of correlation is

a. 0.1905
b. -0.1905
c. 0.4364
d. -0.4364

98.

Refer to Exhibit 14-10. The MSE is

a. 17

Simple Linear Regression

b. 8
c. 34
d. 42
99.

Refer to Exhibit 14-10. The point estimate of Y when X = 3 is

a. 11
b. 14
c. 8
d. 0

100.

Refer to Exhibit 14-10. The point estimate of Y when X = -3 is

a. 11
b. 14
c. 8
d. 0

17

18

Chapter Fourteen

PROBLEMS
1.

Shown below is a portion of an Excel output for regression analysis relating Y

(dependent variable) and X (independent variable).

ANOVA
Regression
Residual
Total

Intercept
x

df
1
8
9

SS
110
74
184

Coefficients
39.222
-0.5556

Standard Error
5.943
0.1611

a. What has been the sample size for the above?

b. Perform a t test and determine whether or not X and Y are related. Let =
0.05.
c. Perform an F test and determine whether or not X and Y are related. Let =
0.05.
d. Compute the coefficient of determination.
e. Interpret the meaning of the value of the coefficient of determination that you
found in d. Be very specific.
2.

Shown below is a portion of a computer output for regression analysis relating Y

(dependent variable) and X (independent variable).
ANOVA
Regression
Residual

Intercept
x

df
1
8

SS
24.011
67.989

Coefficients
11.065
-0.511

Standard Error
2.043
0.304

a. What has been the sample size for the above?

b. Perform a t test and determine whether or not X and Y are related. Let =
0.05.
c. Perform an F test and determine whether or not X and Y are related. Let =
0.05.
d. Compute the coefficient of determination.
e. Interpret the meaning of the value of the coefficient of determination that you
found in d. Be very specific.

Simple Linear Regression

3.

19

Part of an Excel output relating X (independent Variable) and Y (dependent

variable) is shown below. Fill in all the blanks marked with ?.

Summary Output
Regression Statistics
Multiple R
R Square
Adjusted R Square
Standard Error
Observations

0.1347
?
?
3.3838
?

ANOVA

Regression
Residual
Total

SS
2.7500
?
?

Coefficients Standard Error

8.6
2.2197
0.25
0.5101

Intercept
x
4.

df
?
?
14

MS
?
11.45

F
?

Significance
F
0.632

Pt Stat value
?
0.0019
?
0.632

Shown below is a portion of a computer output for a regression analysis relating Y

(dependent variable) and X (independent variable).
ANOVA
Regression
Residual
Total

Intercept
x

df
1
13

SS
115.064
82.936

Coefficients Standard Error

15.532
1.457
-1.106
0.261

a. Perform a t test using the p-value approach and determine whether or not Y
and X are related. Let = 0.05.
b. Using the p-value approach, perform an F test and determine whether or not X
and Y are related.
c. Compute the coefficient of determination and fully interpret its meaning. Be
very specific.
5.

Part of an Excel output relating X (independent variable) and Y (dependent

20

Chapter Fourteen
variable) is shown below. Fill in all the blanks marked with ?.

Summary Output
Regression Statistics
Multiple R
R Square
Adjusted R Square
Standard Error
Observations

?
0.5149
?
7.3413
11

ANOVA

Regression
Residual
Total

SS
?
?
1000.0000

MS
?
?

F
?

Significance
F
0.0129

Coefficients Standard Error t Stat P-value

?
29.4818
3.7946 0.0043
?
0.7000
-3.0911 0.0129

Intercept
x
6.

df
?
?
?

Shown below is a portion of a computer output for a regression analysis relating Y

(demand) and X (unit price).
ANOVA
Regression
Residual
Total
Intercept
X

df
SS
1
5048.818
46
3132.661
47
8181.479
Coefficients Standard Error
80.390
3.102
-2.137
0.248

a. Perform a t test and determine whether or not demand and unit price are
related. Let = 0.05.
b. Perform an F test and determine whether or not demand and unit price are
related. Let = 0.05.
c. Compute the coefficient of determination and fully interpret its meaning. Be
very specific.
d. Compute the coefficient of correlation and explain the relationship between
demand and unit price.
7.

Shown below is a portion of a computer output for a regression analysis relating

supply (Y in thousands of units) and unit price (X in thousands of dollars).

Simple Linear Regression

21

ANOVA
Regression
Residual
Intercept
X

df
1
39

SS
354.689
7035.262

Coefficients
54.076
0.029

Standard Error
2.358
0.021

a. What has been the sample size for this problem?

b. Perform a t test and determine whether or not supply and unit price are related.
Let = 0.05.
c. Perform and F test and determine whether or not supply and unit price are
related. Let = 0.05.
d. Compute the coefficient of determination and fully interpret its meaning. Be
very specific.
e. Compute the coefficient of correlation and explain the relationship between
supply and unit price.
f. Predict the supply (in units) when the unit price is $50,000.
8.

Given below are five observations collected in a regression study on two variables
x (independent variable) and y (dependent variable).
x
2
6
9
9

y
4
7
8
9

a. Develop the least squares estimated regression equation.

b. At 95% confidence, perform a t test and determine whether or not the slope is
significantly different from zero.
c. Perform an F test to determine whether or not the model is significant. Let =
0.05.
d. Compute the coefficient of determination.
9.

Given below are five observations collected in a regression study on two variables,
x (independent variable) and y (dependent variable).
x
2
3
4
5
6

y
4
4
3
2
1

22

Chapter Fourteen
a. Develop the least squares estimated regression equation.
b. At 95% confidence, perform a t test and determine whether or not the slope is
significantly different from zero.
c. Perform an F test to determine whether or not the model is significant. Let =
0.05.
d. Compute the coefficient of determination.
e. Compute the coefficient of correlation.

10.

Below you are given a partial computer output based on a sample of 8

observations, relating an independent variable (x) and a dependent variable (y).
Intercept
X

Coefficient
13.251
0.803

Standard Error
10.77
0.385

Analysis of Variance
SOURCE
Regression
Error (Residual)
Total
a.
b.
c.
d.
11.

SS
41.674
71.875

Develop the estimated regression line.

At = 0.05, test for the significance of the slope.
At = 0.05, perform an F test.
Determine the coefficient of determination.

Below you are given a partial computer output based on a sample of 7

observations, relating an independent variable (x) and a dependent variable (y).
Intercept
x

Coefficient
-9.462
0.769

Standard Error
7.032
0.184

Analysis of Variance
SOURCE
SS
Regression
400
Error (Residual) 138
a.
b.
c.
d.
12.

Develop the estimated regression line.

At = 0.05, test for the significance of the slope.
At = 0.05, perform an F test.
Determine the coefficient of determination.

The following data represent a company's yearly sales volume and its advertising
expenditure over a period of 8 years.

Simple Linear Regression

(Y)
Sales in
Millions of Dollars
15
16
18
17
16
19
19
24

23

(X)
Advertising
in ($10,000)
32
33
35
34
36
37
39
42

a. Develop a scatter diagram of sales versus advertising and explain what it shows
regarding the relationship between sales and advertising.
b. Use the method of least squares to compute an estimated regression line
between sales and advertising.
c. If the company's advertising expenditure is $400,000, what are the predicted
sales? Give the answer in dollars.
d. What does the slope of the estimated regression line indicate?
e. Compute the coefficient of determination and fully interpret its meaning.
f. Use the F test to determine whether or not the regression model is significant
at = 0.05.
g. Use the t test to determine whether the slope of the regression model is
significant at = 0.05.
h. Develop a 95% confidence interval for predicting the average sales for the
years when $400,000 was spent on advertising.
i. Compute the correlation coefficient.
13.

Given below are five observations collected in a regression study on two variables
x (independent variable) and y (dependent variable).
x
10
20
30
40
50

y
7
5
4
2
1

a. Develop the least squares estimated regression equation

b. At 95% confidence, perform a t test and determine whether or not the slope is
significantly different from zero.
c. Perform an F test to determine whether or not the model is significant. Let =
0.05.
d. Compute the coefficient of determination.
e. Compute the coefficient of correlation.

24

Chapter Fourteen

14.

Below you are given a partial computer output based on a sample of 14

observations, relating an independent variable (x) and a dependent variable (y).
Predictor
Constant
X

Coefficient
6.428
0.470

Standard Error
1.202
0.035

Analysis of Variance
SOURCE
Regression
Error (Residual)
Total
a.
b.
c.
d.
e.
15.

SS
958.584
1021.429

Develop the estimated regression line.

At = 0.05, test for the significance of the slope.
At = 0.05, perform an F test.
Determine the coefficient of determination.
Determine the coefficient of correlation.

Below you are given a partial computer output based on a sample of 21

observations, relating an independent variable (x) and a dependent variable (y).
Predictor
Constant
X

Coefficient
30.139
-0.252

Standard Error
1.181
0.022

Analysis of Variance
SOURCE
Regression
Error
a.
b.
c.
d.
e.
16.

SS
1,759.481
259.186

Develop the estimated regression line.

At = 0.05, test for the significance of the slope.
At = 0.05, perform an F test.
Determine the coefficient of determination.
Determine the coefficient of correlation.

An automobile dealer wants to see if there is a relationship between monthly sales

and the interest rate. A random sample of 4 months was taken. The results of the
sample are presented below. The estimated least squares regression equation is
75.061 6.254 X
Y

Y
Monthly Sales

X
Interest Rate (In Percent)

Simple Linear Regression

22
20
10
45

25

9.2
7.6
10.4
5.3

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 the interest
rate and monthly sales at the 1% level of significance. State the null and
alternative hypotheses.
c. At 99% confidence, test the hypotheses.
d. Construct a 99% confidence interval for the average monthly sales for all
months with a 10% interest rate.
e. Construct a 99% confidence interval for the monthly sales of one month with a
10% interest rate.
17.

Max believes that the sales of coffee at his coffee shop depend upon the weather.
He has taken a sample of 5 days. Below you are given the results of the sample.
Cups of Coffee Sold
350
200
210
100
60
40

Temperature
50
60
70
80
90
100

a. Which variable is the dependent variable?

b. Compute the least squares estimated line.
c. Compute the correlation coefficient between temperature and the sales of
coffee.
d. Is there a significant relationship between the sales of coffee and temperature?
Use a .05 level of significance. Be sure to state the null and alternative
hypotheses.
e. Predict sales of a 90 degree day.
18.

Researchers have collected data on the hours of television watched in a day and
the age of a person. You are given the data below.
Hours of Television
1
3
4
3
6

Age
45
30
22
25
5

a. Determine which variable is the dependent variable.

b. Compute the least squares estimated line.
c. Is there a significant relationship between the two variables? Use a .05 level of

26

Chapter Fourteen
significance. Be sure to state the null and alternative hypotheses.
d. Compute the coefficient of determination. How would you interpret this
value?

19.

Given below are seven observations collected in a regression study on two

variables, X (independent variable) and Y (dependent variable).
X
2
3
6
7
8
7
9

Y
12
9
8
7
6
5
2

a. Develop the least squares estimated regression equation.

b. At 95% confidence, perform a t test and determine whether or not the slope is
significantly different from zero.
c. Perform an F test to determine whether or not the model is significant. Let =
0.05.
d. Compute the coefficient of determination.
20.

The owner of a retail store randomly selected the following weekly data on profits
and advertising cost.
Week
1
2
3
4
5

Advertising Cost ($)

0
50
250
150
125

Profit ($)
200
270
420
300
325

a. Write down the appropriate linear relationship between advertising cost and
profits. Which is the dependent variable? Which is the independent variable?
b. Calculate the least squares estimated regression line.
c. Predict the profits for a week when $200 is spent on advertising.
d. At 95% confidence, test to determine if the relationship between advertising
costs and profits is statistically significant.
e. Calculate the coefficient of determination.
21.

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.
Y
Expenditure
.45

X
Income (In Thousands)
20

Simple Linear Regression

10.75
5.40
7.80
5.60

27

19
22
25
14

= 4.348 + 0.0826 X.
The least squares estimated line is Y
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.

22.

Below you are given information on annual income and years of college education.
Income (In Thousands)
28
40
36
28
48

Years of College
0
3
2
1
4

a.
b.
c.
d.

Develop the least squares regression equation.

Estimate the yearly income of an individual with 6 years of college education.
Compute the coefficient of determination.
Use a t test to determine whether the slope is significantly different from zero.
Let = 0.05.
e. At 95% confidence, perform an F test and determine whether or not the model
is significant.
23.

Below you are given information on a woman's age and her annual expenditure on
purchase of books.
Age
18
22
21
28

Annual Expenditure ($)

210
180
220
280

a. Develop the least squares regression equation.

b. Compute the coefficient of determination.
c. Use a t test to determine whether the slope is significantly different from zero.
Let = 0.05.
d. At 95% confidence, perform an F test and determine whether or not the model
is significant.

28

Chapter Fourteen

24.

The following sample data contains the number of years of college and the current
annual salary for a random sample of heavy equipment salespeople.
Years of College
2
2
3
4
3
1
4
3
4
4

Annual Income (In Thousands)

20
23
25
26
28
29
27
30
33
35

a.
b.
c.
d.

Which variable is the dependent variable? Which is the independent variable?

Determine the least squares estimated regression line.
Predict the annual income of a salesperson with one year of college.
Test if the relationship between years of college and income is statistically
significant at the .05 level of significance.
e. Calculate the coefficient of determination.
f. Calculate the sample correlation coefficient between income and years of
college. Interpret the value you obtain.
25.

The following data shows the yearly income (in $1,000) and age of a sample of
seven individuals.
Income (in $1,000)
20
24
24
25
26
27
34

Age
18
20
23
34
24
27
27

a.
b.
c.
d.

Develop the least squares regression equation.

Estimate the yearly income of a 30-year-old individual.
Compute the coefficient of determination.
Use a t test to determine whether the slope is significantly different from zero.
Let = 0.05.
e. At 95% confidence, perform an F test and determine whether or not the model
is significant.
26.

The following data show the results of an aptitude test (Y) and the grade point
average of 10 students.

Simple Linear Regression

Aptitude Test
Score (Y)
26
31
28
30
34
38
41
44
40
43

29

GPA (X)
1.8
2.3
2.6
2.4
2.8
3.0
3.4
3.2
3.6
3.8

a. Develop a least squares estimated regression line.

b. Compute the coefficient of determination and comment on the strength of the
regression relationship.
c. Is the slope significant? Use a t test and let = 0.05.
d. At 95% confidence, test to determine if the model is significant (i.e., perform
an F test).
27.

Shown below is a portion of the computer output for a regression analysis relating
sales (Y in millions of dollars) and advertising expenditure (X in thousands of
dollars).
Predictor
Constant
X

Coefficient
4.00
0.12

Standard Error
0.800
0.045

Analysis of Variance
SOURCE
Regression
Error

DF
1
18

SS
1,400
3,600

a. What has been the sample size for the above?

b. Perform a t test and determine whether or not advertising and sales are related.
Let = 0.05.
c. Compute the coefficient of determination.
d. Interpret the meaning of the value of the coefficient of determination that you
found in Part c. Be very specific.
e. Use the estimated regression equation and predict sales for an advertising
expenditure of $4,000. Give your answer in dollars.
28.

A company has recorded data on the daily demand for its product (Y in thousands
of units) and the unit price (X in hundreds of dollars). A sample of 15 days
demand and associated prices resulted in the following data.

30

Chapter Fourteen
X = 75
Y Y X X = -59
2
Y = 135
X X = 94
2
Y Y = 100
SSE = 62.9681
a. Using the above information, develop the least-squares estimated regression
line and write the equation.
b. Compute the coefficient of determination.
c. Perform an F test and determine whether or not there is a significant
relationship between demand and unit price. Let = 0.05.
d. Would the demand ever reach zero? If yes, at what price would the demand be
zero?