can someone give me an example of what they mean about this problem. I have to come up with a real-world example where we can apply the concept learned within our chapter that the data could be linear which it talks about solving equations using the method of least squares within linear functions.
then explain it but i have no idea how to set it up. I think it would be something of companies data.But i have no clue how to write it down or even if i am right
I think I understand your question.
Ordinary Least Squares (OLS) is a statistical method which is used to ESTIMATE linear (and sometimes non-linear) functions or relationships. On a graph, a linear function is simply a line. Remember, from algebra, the form of a line; y=mx+b, where m is the slope and b is the y-intercept. The topic could be anything; companies, sports, science, technology, etc.
As an example, say you wanted to know how fast a pine tree grows. Every year for 30 years you measure the height. Now plot your data; y is the height of the tree, x is the number of years. Now then you could look at the graph and guess the average slope. Or you could use OLS and estimate the equation. With OLS, you would get a line that "best" represents the relationship between time and height.
I hope this helps.
thank you econmyst in the end i figured out what to do. I was thinking to far and making it more difficult. Thank you for taking your time and helping me out.