The equation of the line of best fit for the sample data in Example 9.6 is:

Sales = 0.74 + 2.38 Temperature Test the hypothesis that the population slope is zero using a 5 per cent level of significance.

H0:  = 0 H1:   0 To find the test statistic we first need to calculate the standard deviation of the residuals.

We can identify the residuals by taking each x value, putting it into the equation of the line of best fit and then working out what Y ‘should’ be, according to the model. The difference between the y value that the equation says should be associated with the x value and the y value that is actually associated with the x value is the residual.