NAME: VINAY AGARWAL

ROLL NO. : R-1001051

MODEL BUILDING
The data has been regarding IIP and CO I have drawn the scatter graph
of CO which is dependent variable and IIP is independent variable. Looking at
the graph we see that the nature of graph is not linear.

So to regress the data first it have to be changed to the linear form for
changing the data in linear form log function is used.

CO=A*IIPβeu

ln CO=lnA+βlnIIP+u

ln CO=α+βlnIIP+u (consider lnA=α)

We have drawn the regression line of semi log function of ln CO vs ln IIP

and obtained the following regression summary output :

SUMMARY OUTPUT

Regression Statistics
0.99461
Multiple R 8
0.98926
R Square 6
Adjusted R
0.98885
Square 3
Standard 0.14347
Error 5
Observatio
ns 28

ANOVA
Significa
df SS MS F nce F
Regressio 49.3265 49.326 2396. 3.91137E
n 1 4 54 22 -27
0.53521 0.0205
Residual 26 3 8
49.8617
Total 27 5

Coefficie Standar P-
nts d t Stat value Lower Upper Lower Upper
Error 95% 95% 99% 99%
- -
0.38767 0.25015 1.5497 0.133 0.126518 0.90187 0.30742 1.0827
Intercept 9 3 6 2 3 79 5 8
X Variable 2.53167 0.05171 48.951 3.90E- 2.425362 2.63797 2.6753
1 1 8 2 27 6 94 2.38796 81

From the regression output we find out the value of intercept i.e. α(ln A)=0.39 and
slopeβ=2.53

lnCO= 0.39+2.53ln IIP+u

The value of R2=0.99 it means standard error of regression is very low or the
regression model has coefficient of determination =0.99 and explained 99% of
times the regression model explained the variations in population regression
function.

The f value calculated is 2396 but that obtained from the table is 4.227 this means
the variation due to regression is greater than the variation due to residual this
means the f- value is statistically significant and the null hypothesis that

H0: S.D.(ESS) /S.D.(RSS)=0 rejected

From the p-value it is clear that the value of α has only 13% Probability of
committing error if we reject the null hypothesis HO:α=0

From the p-value it is clear that the value of α has only 0% Probability of
committing error if we reject the null hypothesis HO:β=0
Upper 95% and lower 95% gives the limit in between which the value of actual α
value will 95% of times will lie below 0.90 and above -0.13 .

Upper 99% and lower 99% gives the limit in between which the value of actual α
value will 95% of times will lie below 1.08 and above -0.31.

α= ln A=0.39

A=e0.39=1.477

CO=1.477(IIP)2.53eu

The line fit plot above shows the line graph of actual and predicted Y the
overlapping of both the line shows that the explained variable is very near to
the actual values. Hence model is good enough.