Super Markets, Inc., is considering expanding into the Scottsdale, Arizona, area. You as director of planning, must present an analysis of the proposed expansion to the operating committee of the board of directors. As a part of your proposal, you need to include information on the amount people in the region spend per month for grocery items. You would also like to include information on the relationship between the amount spent for grocery items and income. Your assistant gathered the following sample information. The data is available on the data disk supplied with the text.

a. Let the amount spent be the dependent variable and monthly income the independent variable. Create a scatter diagram, using a software package.

b. Determine the regression equation. Interpret the slope value.

c. Determine the coefficient of correlation. Can you conclude that it is greater than 0?

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Household Amount Spent Monthly Income 1 $ 555 $4,388 2 489 4,558 39 1,206 9,862 40 1,145 9,883