In each of Exercises 14.64-14.69, apply Procedure 14.2 on page 567 to find and interpret a confidence interval, at the specified confidence level, for the slope of the population regression line that relates the response variable to the predictor variable.
14.66 Custom Homes. Refer to Exercise 14.60; 99%.

Short Answer

Expert verified

The increase in mean price per hundreds of square feet increase in size for the custom homes is somewhere between $1695and $3009at 99%confidence interval.

Step by step solution

01

Given information

To find the confidence interval at 99%that refer to Exercise 14.60.

The given data at Exercise 14.60 as follows:

Size
26
27
33
29
29
34
30
40
22
Price
540
555
575
577
606
661
738
804
496
02

Explanation

The regression t-interval as follows:
Since n=9for a 99%confidence interval, α=0.01:
df=n-2
=9-2
=7
According to calculation:

tα/2=t0.01/2

=t0.005

=3.500

For β1, the formula for finding the end points of the confidence interval is as follows:

b1±tα/2seSII.

03

Explanation

Table of calculations as follows:

x
y
xy
x2
y2
26
540
14040
676
291600
27
555
14985
729
308025
33
575
18975
1089
330625
29
577
16733
841
332929
29
606
17574
841
367236
34
661
22474
1156
436921
30
738
22140
900
544644
40
804
32160
1600
646416
22
496
10912
484
246016
xi=270
yi=5552
xiyi=169993
xi2=8316yi2=3504412
04

Explanation

Let,Sxy=xiyi-xiyi/n
=169993-(270)(5552)/9
=169993-1499040/9
=169993-166560
=3433

Then, Sxx=xi2-xi2/n

=8316-(270)2/9

=8316-72900/9

=8316-8100

=216

The total sum of square SST is calculated as follows:

Syy=yi2-yi2/n

=3504412-(5552)2/9

=3504412-30824704/9

=3504412-3424967.111

=79444.88889

05

Explanation

The regression sum of squares SSR is calculated as follows:
SSR=Sxy2Sxx
=(3433)2216
=11785489216
=54562.44907
SSE=SST-SSR
=79444.88889-54562.44907
=24882.43981
The slope of the regression line can be calculated using the following formula:
b1=SxySxx
=3433216
=15.89351852

06

Explanation

The standard error of the estimate is calculated using the formula:

se=SSEn-2

=24882.439819-2

=59.6207536

59.621
Let, b1=15.89351852
se=59.621
Sxx=216
Hence,

15.89351852±3.500×59.621216
Also,15.89351852±14.19837459, Or 1.695to 30.091
As a result, the increase in mean price per hundreds of square feet increase in size for the custom homes is somewhere between $1695and $3009at 99%confident.

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Most popular questions from this chapter

Following are the data on the percentage of investments in energy securities and tax efficiency95%,α=0.05 . find and interpret a confidence interval, at the specified confidence level, for the slope of the population regression line that relates the response variable to the predictor variable.

Which graph used in a residual analysis provides roughly the same information as a scatterplot? What advantages does it have over a scatterplot?

a. Obtain a point estimate for the mean tax efficiency of all mutual fund portfolios with6% of their investments in energy securities,

b. Determine a 95%confidence interval for the mean tax efficiency of all mutual fund portfolios with6% of their investments in energy securities.

c. Find the predicted tax efficiency of a mutual fund portfolio with6% of its investments in energy securities.

d. Determine a95%prediction interval for the tax efficiency of a mutual fund portfolio with 6%of its investments in energy securities.

In this section, we used the statistic b1as a basis for conducting a hypothesis test to decide whether a regression equation is useful for prediction. Identify two other statistics that can be used as a basis for such a test.

14.75 High and Low Temperature. The data from Exercise 14.39for average high and low temperatures in January for a random sample of 50cities are on the WeissStats site.

a. Decide whether you can reasonably apply the regression t-test. If so, then also do part b.

b. Decide, at the 5%significance level, whether the data provide sufficient evidence to conclude that the predictor variable is useful for predicting the response variable.

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