Lobsters 2016, part 3.

Of course, what matters most to the individual entrepreneur—the licensed commercial lobster fisher—is the price of lobster. Here’s an analysis relating that price ($/lb) to the number of traps (millions)

since 1950:

Dependent variable is: Price/lb R squared = 92.8%

s = 0.3399 Variable Coefficient Intercept -0.2750 Traps(M) 1.2522

a) Are the assumptions and conditions for regression inference satisfied?

b) What does the coefficient of Traps mean in this model? Does it predict that licensing more traps would cause an increase in the price of lobster? Suggest some alternative explanations.

Transcribed Image Text:

4 3 2 Price/lb oo 8 c o 9000 - 0 0 3.00 + + + 0.75 1.50 2.25 Traps (M) 0.8 % o 08008 0.4 0.0 -0.4 Residuals 0 a 0 P 8 1 2 Predicted 3