An insurance company suspects that there is a positive linear relationship betwe

Question

An insurance company suspects that there is a positive linear relationship between the dollar amount of fire damage in residential fires, and the distance between the residence and the nearest fire station. Data were collected on a random sample of 17 residential fires and the results are given below. The amount of fire damage (in thousands of dollars) is denoted as cost, and the distance between the residence and the nearest fire station (in miles) is denoted as distance.

Test the appropriate hypothesis at the .10 level of significance. Make sure that ALL the steps of the hypothesis testing process are clearly identified in the appropriate order. Note that the value of the test statistic has to be obtained from the Excel output, NOT calculated by hand.

Cost Distance 26 1.5 27 2.6 28 3.7 37 3.8 38 4.3 47 4.5 48 4.9 50 5.8 52 6.5 57 6.8 59 7.5 68 7.6 70 8.4 83 8.5 84 9.3 96 9.4 98 9.9

Explanation / Answer

The hypothesis is

H0: there is no linear relationship

H1: there is linear relationship

x y x 1.000 y .962 1.000 17 sample size

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