To promote safe driving habits and to better protect its customers, an insurance company offers a discount
Question:
To promote safe driving habits and to better protect its customers, an insurance company offers a discount of between 5% and 20% on renewal insurance premiums to customers who have completed a defensive driving course. The following table of data shows the number of customers who have applied for the discount at various discount levels, over a period of 12 months.
a. Determine the estimated equation of the straight-line regression of the number of customers applying for the discount (Y) on the discount level (X).
b. Determine the estimated equation of the quadratic regression of the number of customers applying for the discount (Y) on the discount level (X).
c. Plot both estimated models, along with a scatterplot of the data. Which model appears to fit the data better?
d. Conduct variables-added-in-order tests for the model in part (b).
e. Carry out tests for the significance of the straight-line regression in part (a) and for the adequacy of fit of the estimated regression line.
f. Carry out tests for the significance of the quadratic regression in part (b) and for the adequacy of fit of the second-order model.
g. Based on the results from parts (a) through (f), which of the two regressions appears to be more appropriate for predicting the number of customers who apply for the discount?
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Related Book For
Applied Regression Analysis And Other Multivariable Methods
ISBN: 632
5th Edition
Authors: David G. Kleinbaum, Lawrence L. Kupper, Azhar Nizam, Eli S. Rosenberg
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