2. (10 marks) Is there a gnificant relationship between income and amount spent

Question

2. (10 marks) Is there a gnificant relationship between income and amount spent on holiday presents? b What is the strength of the relationship? LetX ss, = 12. - income and Y - amount spent, where SS, 596.83 and Income (in Amount spent on holiday presents (in hundreds of dollars) 4 7 6 4 thousands of dollars) 35 64 41 39 47 BONUS: If you had answered this question using SPSS, what do you know about the p-value you would have obtained in the "Sig." column of the output? 3. (12 marks) Iif you used the data in Question 2 to find the equation of the regression line that best predicts the amount spent on holiday presents based on a person's inco a significant amount of the variability in the amount spent on holiday presents? (NOTE: you don't actually have to find the equation of the line, but you do have to do an analysis of regression.) me, would that equation predict BONUS: Could you use this line to predict amount spent by a person with an income of 100,000? Why or why not? BONUS: Explain why the regression line is also referred to as the "least squared" solution.

Explanation / Answer

2)

r= 0.898041

strength - strong

p-value of b is 0.015 < 0.05

hence significant

3)

no, as p-value of F = 0.015 < 0.05

the model is significant

no, we can predict if income = 100,000

as this is not between the observed sample

extrapolating regression doesn't give reliable result

Please rate

SUMMARY OUTPUT Regression Statistics Multiple R 0.898041557 R Square 0.806478637 Adjusted R Square 0.758098297 Standard Error 0.761947563 Observations 6 ANOVA df SS MS F Significance F Regression 1 9.677743647 9.677743647 16.66955267 0.015063331 Residual 4 2.322256353 0.580564088 Total 5 12 Coefficients Standard Error t Stat P-value Lower 95% Intercept -0.963697291 1.493429729 -0.645291354 0.553887287 -5.110122952 x 0.127338732 0.031188792 4.082836351 0.015063331 0.040744764

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