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Data given below are on the adjusted gross income a and the amount of itemized deductions taken by taxpayers. Data were reported in thousands of
Data given below are on the adjusted gross income a and the amount of itemized deductions taken by taxpayers. Data were reported in thousands of dollars. With the estimated regression equation y = 4.68 + 0.16x, the point estimate of a reasonable level of total itemized deductions for a taxpayer with an adjusted gross income of $52,500 is $13,080. Click on the datafile to reference the data. Excel File: data14-37.xIsx Adjusted Gross Reasonable Amount of Itemized Income ($1000s) Deductions ($1000s) 22 9.6 27 9.6 32 10.1 48 11.1 65 13.5 85 17.7 120 25.5 Use the estimated regression coefficients rounded to 2 decimals in your calculations. a. Develop a 95% confidence interval for the mean amount of total itemized deductions for all taxpayers with an adjusted gross income of $52,500 (to 2 decimals). x thousand to $ thousand b. Develop a 95% prediction interval estimate for the amount of total itemized deductions for a particular taxpayer with an adjusted gross income of $52,500 (to 2 decimals). $ thousand to $ thousand c. If the particular taxpayer referred to in part (b) claimed total itemized deductions of $20,400, would the IRS agent's request for an audit appear to be justified? Yes it is larger than anticipated. d. Use your answer to part (b) to give the IRS agent a guideline as to the amount of total itemized deductions a taxpayer with an adjusted gross income of $52,500 should claim before an audit is recommended (to the nearest whole number). Any deductions exceeding the $ upper limit could suggest an audit
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