Regression analysis was performed on Demographics data using unemployment rate as the dependent variable and cost of living index as the independent variable. Compute and analyze the residuals to determine if the assumptions underlying the regression analysis are valid. In addition, use the standard residuals to determine if any possible outliers exist.

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Part 1

Determine if the assumptions underlying the regression analysis are valid.

Linearity

be assumed.

The data

are not

are

linear.

Normality of errors

can

cannot

be assumed.

The histogram of the standard residuals

roughly bell-shaped.

Homoscedasticity

cannot

can

be assumed.

The variation about the regression line

is not

is

constant for all values of the independent variable.

Independence of errors

can

cannot

be assumed.

The residuals

are not

are

independent for each value of the independent variable.

Therefore, the assumptions

are not

are

valid.