The savings (Sav) and number of children (Child) of four families are given below:

Child Sav 2 0.03 2 0.874 0 0.374 1 1.2

(A) Calculate the values of ˆ

0 and ˆ

1 so that ei 2

is minimized for sav = ˆ + ˆ i child + e 0 1 i i

(B) Interpret the values you obtained.

(C) Sketch the ordinary least squares line in the graph.

Transcribed Image Text:

sav 1.5 1 0.5 0 0 1 child 2 3