Posted by **Maiko** on Friday, March 19, 2010 at 3:49pm.

An insurance company wishes to examine the relationship between income (in $,000) and the amount of life insurance (in $,000) held by families. The company drew a simple random sample of families and obtained the following results:

Family - Income - Amount of Life Insurance

A - 40 - 110

B - 80 - 200

C - 110 - 220

D - 80 - 150

E - 80 - 170

F - 120 - 270

G - 60 - 140

H - 100 - 240

I - 60 - 150

J - 90 - 200

Question 1

What is the least squares estimate of the slope?

Question 2

What is the least squares estimate of the Y intercept?

Question 3

What is the prediction for the amount of life insurance for a family whose income is $85,000?

Question 4

What would be the residual (error) term for a family income of $90,000?

All answers should be to four decimal places.

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