For the online clothing retailer discussed in the previous problem, the scatterplot of Total Yearly Purchases by Income looks like this:

The correlation between Total Yearly Purchases and Income is 0.722. Summary statistics for the two variables are:

a) What is the linear regression equation for predicting Total Yearly Purchase from Income?
b) Do the assumptions and conditions for regression appear to be met?
c) What is the predicted Total Yearly Purchase for someone with a yearly Income of $20,000? For someone with an annual Income of $80,000?
d) What percent of the variability in Total Yearly Purchases is accounted for by this model?
e) Do you think the regression might be a useful one for the company? Comment.

Transcribed Image Text:

1400 1200 1000 800 ·600 4004 20 30 40 50 0 70 80 Income (thousands of dollars) Mean SD $50,343.40 $16,952.50 Total Yearly Purchase $572.52 $253.62 Income