Examine the following sample data for the variables y and x:

x 1 2 3 4 5 y 4 2 5 8 9

a. Construct a scatter plot of these data. Describe the relationship between x and y.

b. Calculate the sum of squares error for the following equations: (1) yn = 0.8 + 1.60x, (2) yn = 1 + 1.50x, and (3) yn = 0.7 + 1.60x.

c. Which of these equations provides the “best” fit of these data? Describe the criterion you used to determine “best” fit.

d. Determine the regression line that minimizes the sum of squares error.

Business Applications