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The following two regression models were fitted on annual savings (Y in pounds) and income (X in 10005) for 20 randomly selected individuals: V =
The following two regression models were fitted on annual savings (Y in pounds) and income (X in 10005) for 20 randomly selected individuals: V = 83.87 + 5.23x R2 = 0.31 (Model 1) V =328.44 - 4.12X + 0.072X2 R2 = 0.92 (Model 2) i) Interpret the meaning of the slope coefficient for Model 1. ii) At the 1% level of significance, test to determine whether or not Model 2 is superior to Model 1. iii) For Model 2, determine the adjusted coefficient of determination. Explain the difference between R2 and the adjusted R2. iv) Using Model 2, estimate the annual savings for an individual with an income of 100,000. Do you prefer the results from the quadratic model? Explain
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