The Owner of a Bakery Wants to Analyze the Relationship

question 72

Essay

The owner of a bakery wants to analyze the relationship between the expenditure of a customer and the customer's income. A sample of 5 customers is taken and the following information was obtained. The least squares estimated line is = 4.348 + 0.0826 X.
a.Obtain a measure of how well the estimated regression line fits the data.
b.You want to test to see if there is a significant relationship between expenditure and income at the 5% level of significance. Be sure to state the null and alternative hypotheses.
c.Construct a 95% confidence interval estimate for the average expenditure for all customers with an income of $20,000.
d.Construct a 95% confidence interval estimate for the expenditure of one customer whose income is $20,000.

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Definitions:

Seasonal Unemployment

Unemployment due to seasonal variations in demand or supply of labor, common in industries like agriculture and tourism.

Full Employment Level

The level of employment where all available labor resources are being used in the most economically efficient way.

Vietnam War

A prolonged conflict from 1955 to 1975 between North Vietnam, supported by its communist allies, and South Vietnam, supported by the United States and other anti-communist countries.

Demand-Pull Inflation

Inflation that occurs when the demand for goods and services exceeds the available supply, leading to higher prices.