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Y b0 b1 X
^
Coefficients:
The
SSE 2 Yi o 1 X i
i 1
n
and
SSE 2 Yi o 1 X i X i
1
i 1
nb0 b1 X i Yi
i 1
i 1
n
n
n
b0 X i b1 X i2 X iYi
i 1
i 1
i 1
s xy
s x2
and
b0 y b1 x .
NOTE:
b0 represents the value of Y when X is zero
b1 represents the change in variable Y for every one
unit change in variable X
b0 y b1 x
s xy
b1
s x2
2
^2
Yi
b
0
b
1
Xi
MLE
^ 2
Note: 1. is biased.
Yi b0 b1Xi
2.
MLE
^ 2
n 1
is minimum.
^
3. Yi Yi
4. The regression line passes through
x, y .
Example 1:
Suppose that we want to predict a students grade in
freshman chemistry based upon his score on an intelligence
test administered prior to his attending college. Refer to the
following table.
Student
Test Score, x
1
2
3
4
5
6
7
8
9
10
11
12
65
50
55
65
55
70
65
70
55
70
50
55
Chemistry Grade,
y
85
74
76
90
85
87
94
98
81
91
76
74
Series1
40
20
0
0
20
40
60
80
n x i y i x i y i
n x i2
x i
and
a y bx
Exercises:.
1. Find the regression line for the data in Remark 7.1.3.
2. A study was made on the amount of converted sugar in a
certain process at various temperatures. The data were
coded and recorded as follows:
Temperature, x
Converted Sugar, y
1.0
8.1
1.1
7.8
1.2
8.5
1.3
9.8
1.4
9.5
1.5
8.9
1.6
8.6
1.7
10.2
1.8
9.3
1.9
9.2
2.0
10.5
a. Estimate the linear regression line.
b. Estimate the amount of converted sugar produced
when the coded temperature is 1.75.
3. A study was made by a retail merchant to determine the
relation between weekly advertising expenditures and
sales. The following data were recorded:
Advertising Costs, in $
Sales, in $
40
385
20
400
25
395
20
365
30
50
40
20
50
40
25
50
475
440
490
420
560
525
480
510
Correlation Coefficient,
measures the degree of linear relationship between
two variables X and Y
its value ranges from -1 (perfect linear relationship
with negative slope) to +1 (perfect linear
relationship with positive slope)
A linear correlation coefficient is a measure of the
linear relationship between the two random variables X and
Y and usually denoted by r.
If points follow closely a straight line of positive
slope, then we have a high positive correlation between X
and Y. If points follow closely a straight line of negative
slope, then we have a high negative correlation between X
and Y.
of :
3
X
>0
<0
s xy
s x2 s 2y
SPxy
SS x SS y
where
6
5
4
Y 3
2
1
0
0
3
X
n
n
X
i Yi SP
1 n
i 1 i 1 xy ,
s xy
X iYi
n 1
n 1 i 1
n
Xi
n
1
2 i 1 SS x
s x2
X
i
n 1 and
n 1 i 1
n
Yi SS
n
1
y
2 i 1
s 2y
Y
n 1
n 1 i 1
n
bs x
sy
SSR b1s xy
R
2 x100% .
SST
sy
2
Test of Hypothesis
H0: = 0 (There is no correlation between X and Y.)
vs
H1: (a) 0 (There is correlation between X and Y.)
(b) > 0 (There is positive correlation between X and
Y.)
(c) < 0 (There is negative correlation between X
and Y.)
Test Statistic :
tc
r n2
Test Statistic:
z
1 r
with
vn2
n 3 1 r 1 r0
ln
2
1 r 1 r0