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Chapter 10

Question 7

Least-squares regression

Evaluate the line of best fit formula from the following information:

2
2
n = 6, ∑x = 21, ∑y = 482, ∑xy = 2,213, ∑x = 91, ∑y = 60,514
∑ ∑ ∑
b =

∑ ∑
2
b = (6 × 2,213 – 21 × 482)/(6 × 91 – 21 )

b = 3,156/105 = 30.06

a = y – bx

a = 482/6 – 30.06 × 21/6

a = –24.88

y = –24.88 + 30.06x

Question 8

Regression equation

If the regression equation linking costs (y, in $) and productivity levels (x, in
units produced) is y = 55,000 + 25x, forecast the cost when 6,000 units are
produced.

y = 55,000 + 25 × 6,000 = $205,000

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