You come across a magazine article reporting the following relationship between annual expenditure on prepared dinners (PD) and annual income (INC, in dollars): (5 points each, 20 points in total)

PD= 23.4 + .003INC

The coefficient of the INC variable is reported as significant.

1. Does this relationship seem plausible? Is it possible to have a coefficient that is small in
2. magnitude and yet significant?
3. From the information given, can you tell how good the estimated model is?
4. What are the expected expenditures on prepared dinners of a family earning $30,000?
5. If a family earning $40,000 spent $130 annually on prepared dinners, what is the residual?